IFRS for SME standards a paramount need
Crowe Horwath moots Institute of Chartered Accountants in the Sultanate — MUSCAT — Dr Yahya bin Saeed al Jabri, Chairman of the Special Economic Zone Authority of Duqm (SEZAD), inaugurated a workshop on International Financial Reporting Standards (IFRS) organised by Horwath Mak Ghazali Oman at Crowne Plaza Muscat last week. Welcoming the chief guest and other dignitaries, Davis Kallukaran, Managing Partner, stated: “Since the introduction of IFRS for SMEs, over 50 countries have adopted or have significantly been influenced by the new standards. The SME standards are also specifically written for privately held businesses which can avoid many disclosures that are required under full IFRS and it is less complex in number of ways. A number of topics not relevant for SMEs have been omitted. Only fewer disclosures are required which is a great relief to the entities,” he added.
IASB describes small and medium sized entities as those that do not have public accountability. These standards are suitable for all entities except those whose securities are publicly traded, and financial institutions such as Banks and Insurance companies. So SME standards are bound to make reporting less complicated for the estimated 95 per cent of business entities the world over. However the decisions rest with regulatory authorities in each country. In the Sultanate, a small company is defined as one employing less than nine employees and medium size as one employing nine to ninety-nine employees. According to the Omani Ministry of Finance, based on the above definition there are close to 120,000 SMEs in the Sultanate contributing about 20 per cent of Oman’s GDP. “These numbers should cover more than 99 per cent of the companies under the global definition of SMEs and we hope that the SME standards will shortly be introduced in Oman,” Kallukaran commented.
The International Financial Reporting Standards are followed in over 100 countries and have become the yardstick for evaluation of financial statements. The IASC is committed to narrowing the differences in financial reporting by seeking to harmonise regulations, standards and procedures for presentation of financial statements across the globe. Continuing corporate failure across the globe has necessitated drastic amendments in the existing IFRS and introduction of new standards. As of now there are 41 standards comprising of IAS and IFRS and numerous interpretations. In his address, Kallukaran also underlined the need for more qualified accountants to join the industry. “Most of the students stop at the graduation level and some go for professional courses in other countries mainly UK and US. The highly complicated tax laws and corporate laws of those countries are of no use to them in Oman.
We need accountants who are well versed in Omani laws. Hence, we need an Institute of Chartered Accountants of Oman to certify the accountants and monitor their practice of ethics in the profession and compliance to the academic curriculum. The beauty of the Chartered Accountancy course is that the practical training of three to four years and the studies for the examination goes together. With the result, they are well experienced by the time they qualify.” Muna al Ghazali, founding Partner at Crowe Horwath Oman, commented: “Today and tomorrow you will learn the ways and means of understanding the International Financial Reporting Standards, why the standards were introduced and the application of the standard.
Most of the countries in this region follow IFRS and is the same with Oman. The uniformity in application of the standards across the region makes it easier for the stake holders like bankers, your suppliers and your customers to understand the financial position in the same way as their colleagues in other countries.” She assured the delegates that the learned faculties, Shreedhar and Anand, will both give them the required knowledge skill to help update them. On behalf of Horwath Mak Ghazali, Muna thanked Dr Yahya al Jabri for having graced this function with his presence. (OEPPA Business Development Dept)