Accounting is very important for the business. It aids the business in reducing expenses and avoiding unwanted expenses. A proper accounting system enables the business to give proper financial insight to the directors, stakeholders, Investors, and senior people. People are establishing their business in Dubai, UAE because of the tax-free system, state-of-the-art infrastructure, and various advantages in UAE that attract business owners to set up their business. As we know all accounting is a major part of the business and Companies also can’t run effectively without effective accounting.
There are different accounting standards for the different industry businesses and develop the standard that will help the company to keep clear the future problems. Accounting standards also play a major role in enhancing the company’s goodwill.
Accounting Standards and Definition
International Financial Report Standard (IFRS)
IFRS is an accounting standard that is needed to be followed by the company. The International Accounting Standards Board (IASB) and the IFRS Foundation accounting standard make financial statements understandable across the countries. This standard of accounting enables the different countries’ financial statements to be easily compared with each other to find new and better avenues of investments.
The IFRS specifies different kinds of techniques and methods of recording, defining, reporting, and maintaining and makes an accounting language or methods which is used all over the world and also provides consistency.
The IFRS Accounting standard is used by around 120 countries in the world. Countries companies are mentioned in the report that they are using IFRS standards in accounting. The United States of America and Canada don’t use the IFRS. Canada has their own accounting standard system and the USA uses the GAAP.
Generally Accepted Accounting Principles (GAAP)
Gaap is also a set of standards, accounting principles, and procedures issued by the FASB (Financial Accounting Standards Board). It is a combination of the commonly accepted method or way of reporting and recording accounting information and authoritative standards set by the policy board. GAAP provides and improves the clarity, consistency, and comparability of financial information. GAAP makes it easier for the investors to analyze and check the useful information of the company from the financial statement.
GAAP is also used by many countries and developed by the International Accounting Standard Board (IASB) and Financial Accounting Standard Board (FASB). GAAP implementation requires good accounting service because it includes the revenue recognition, balance sheets, and outstanding classification of items and shared estimations for public disclosure.
Different Between IFRS and GAAP
Currently, For accounting communication globally more than 100 countries in Asia and the European Union are using IFRS. But the USA is still using GAAP. Canada has its own accounting Standard System.
International Financial Report Standard (IFRS) in UAE.
Securities and Commodities Authority (SCA) and the central bank of the UAE have made the IFRS accounting standard the mandatory accounting system in UAE. The other various non-regulated bodies have to follow the IFRS. All the registered companies under Dubai Financial Market (DFM), NASDAQ Dubai (Formerly known as DIFX), or Abu Dhabi Securities Exchange (ADX) are required to maintain their accounts as per IFRS. Onwards 2013 all the legally listed companies in the Abu Dhabi Securities exchange have to submit the IFRS financial statement.
All banks in UAE and even central banks need to follow IFRS accounting standards and publish financial accounting statements according to them. However, IFRS is not required for those companies that are not listed for various exchanges but implementing IFRS is considered a good practice of accounting. If you are thinking and wanting to establish a business in UAE or looking for the best accounting service for your business, you have landed at the right place. Risians Accounting and auditing is a leading accounting firm that is known for its quality and effective services. Risians Accounting has FTA-approved chartered accountant who has 30+ years of working experience in accounting, auditing, Business formation, and taxation that is the biggest reason for leading a firm in Dubai and also keeps us 1000 steps ahead from the other accounting firm. Make us helping hands for your business success and save hard-earned money on taxes.