IFRS Advisory / IFRS Impact Assessment

A written technical memo analysing which IFRS standard(s) apply to your specific transaction or transition, the judgement calls involved, the quantified impact on your financial statements (opening balance adjustments, profit-or-loss effect, and disclosures), and a recommended accounting policy your finance team and statutory auditor can both work from.

Most mainland LLCs and free zone entities across JAFZA, DMCC, ADGM, DIFC, RAKEZ, and similar jurisdictions must prepare audited financial statements under IFRS (or IFRS for SMEs, where the entity qualifies and the relevant authority permits it) as part of annual licence renewal and, since Federal Decree-Law No. 47 of 2022, as the accounting basis for UAE Corporate Tax.

IFRS for SMEs is a simplified version of full IFRS designed for entities without public accountability, with reduced disclosure and some simplified recognition and measurement requirements. Whether an entity can use it depends on its size, ownership structure, and whether its free zone or licensing authority permits it — switching between the two frameworks is itself a transition event requiring an impact assessment.

Under Federal Decree-Law No. 47 of 2022, taxable income for UAE Corporate Tax (9% above AED 375,000 taxable income, 0% up to that threshold, and 0% on qualifying income for a Qualifying Free Zone Person) is calculated starting from accounting net profit prepared under IFRS or IFRS for SMEs, then adjusted for specific items set out in the law and related Ministerial Decisions. An incorrect IFRS treatment can therefore directly misstate the tax base.

IFRS 18, Presentation and Disclosure in Financial Statements, introduces new required categories and subtotals in the statement of profit or loss (including a defined 'operating profit' subtotal), disclosure of management-defined performance measures, and enhanced aggregation and disaggregation principles. It is effective for annual reporting periods beginning on or after 1 January 2027, replacing IAS 1 for presentation purposes, with earlier application permitted.

Yes, if the entity will prepare IFRS financial statements for the first time — whether newly incorporated or newly required to produce audited accounts. IFRS 1 sets out specific exemptions and requirements for building a clean opening balance sheet and comparative period, and getting this right at the outset avoids restating figures in later years.

IFRS 16 generally requires lessees to recognise a right-of-use asset and a corresponding lease liability on the balance sheet for most leases, replacing the prior off-balance-sheet operating lease treatment, with limited exemptions for short-term and low-value leases. We assess your specific lease terms — length, renewal options, variable payments — to determine the correct classification and quantify the balance sheet impact.

Any change in how you contract with customers — bundled products and services, milestone or usage-based billing, agency versus principal arrangements, warranties, or variable consideration such as discounts and rebates — can change the timing and pattern of revenue recognition under IFRS 15's five-step model, and warrants a review before the new contract terms are applied in the books.

IFRS 9 requires related-party loans and receivables to be classified (amortised cost, fair value through other comprehensive income, or fair value through profit or loss) based on the business model and contractual cash flow characteristics, and — where the loan is not on market terms — may require recognition of a day-one gain or loss and expected credit loss provisioning.

Yes. Where an acquisition, restructuring, or new subsidiary/associate/joint venture changes the group structure, we assess whether consolidation is required, determine the correct classification (subsidiary, associate, or joint venture) under IFRS 10/IAS 28, and, for business combinations, apply IFRS 3 to identify and measure the acquired assets, liabilities, and any goodwill.

A single-issue assessment — one lease, one financial instrument, one revenue contract type — typically takes one to three weeks depending on how quickly supporting documents and management input are available. A full new-standard transition across a group, or a first-time IFRS adoption, generally takes several weeks and should be started well ahead of the reporting period it affects.

No. IFRS advisory and impact assessment can be performed independently of who holds the statutory audit appointment. Where a different firm is the incumbent auditor, we typically share the technical memo with them (with client consent) ahead of fieldwork so the position is pre-agreed rather than debated during the audit.

We document the alternative positions considered and the basis for our recommendation, and remain available to discuss directly with the statutory auditor. Where a genuine difference in professional judgement remains, the statutory auditor's view governs the audited financial statements, since they hold the opinion responsibility — but a well-documented position materially narrows the scope of any disagreement.

Yes. The impact assessment includes drafting the accounting policy note and any specific disclosure wording required under the relevant standard (for example, IFRS 16 lease disclosures, IFRS 9 financial instrument risk disclosures, or IFRS 3 business combination disclosures), which your finance team or auditor can incorporate directly into the financial statements.

Where an IFRS transition or transaction creates a temporary difference between the accounting carrying value and the tax base of an asset or liability, deferred tax recognition under IAS 12 needs to be assessed alongside the primary accounting impact, since UAE Corporate Tax now makes deferred tax a live consideration for most taxable entities rather than a purely theoretical one.

Yes, and arguably more so — a QFZP's 0% Corporate Tax rate applies only to qualifying income meeting specific conditions, and the accounting classification of income streams (qualifying versus non-qualifying, and correct segregation in the financial statements) depends on accurate IFRS-based income recognition and presentation in the first place.

An IFRS impact assessment is a natural opportunity to formalise a written accounting policy manual covering the areas assessed, which strengthens audit readiness and gives incoming finance staff a clear reference rather than relying on institutional memory.

Yes. For groups with several UAE entities (and, where relevant, entities in other jurisdictions including India), we can run the assessment at group level, ensuring the same standard is applied consistently across entities and that consolidation adjustments correctly eliminate intercompany positions.

Yes, where the standard requires retrospective or modified-retrospective transition, the assessment includes the comparative-period restatement workings needed so the financial statements present a consistent, comparable prior-year figure alongside the current year.

We document the fact pattern, the standard's specific requirements, the judgement exercised, and the alternative positions considered and rejected, so the reasoning behind the final position is traceable months or years later — not just the conclusion.

We present the range of acceptable positions under the standard, the arguments for each, and a recommended position with clear reasoning — rather than presenting a single answer as though the standard were unambiguous when it is not. Management then makes an informed decision with the auditor's likely reaction already considered.

A statutory auditor's role is to independently test and opine on the financial statements as prepared — raising a position mid-audit as a query, not developing it collaboratively beforehand. PNPC's advisory role is to work with management ahead of time to build a well-reasoned position the auditor can then review efficiently, which shortens the audit cycle and reduces the risk of late-stage disputes or a qualified opinion.