Bookkeeping is part and parcel of every running business. It helps the companies to track their
expenses to ensure effective financial management. Not only this, step-by-step deployment of the
accounting cycle enables the companies to provide better insights to the stakeholders, potential
investors, and quantitative information of monetary assets to the state institutions for audits.
For this purpose, the business people in Dubai and across the UAE have to ensure compliance with
universal accounting standards for higher transparency and accuracy of financial records.
Nevertheless, almost all the authorities in the UAE ask for financial statements every time you
go to renew your license. For this purpose, companies have to consider account audits to
generate performance reports of your company. When you need a loan to facilitate your
requirements in the company, the banks inquire for a copy of the financial accounts your company
has dealt with. The suppliers in the UAE also ask for the financial account statements to help
you in your credit facility.
All businesses follow accounting standards quite well. The article is aimed to help you
understand different types of standards used internationally and the one recommended for
managing business accounts for regulations compliance in UAE.
WHAT ARE THE ACCOUNTING STANDARDS, DEFINITION & TYPES
Accounting standards are the principles set for financial reporting. The rules are basically
specified to record how the transactions are to be made. It provides some leverage and some
financial information to the creditors, lenders, and investors.
Basic accounting is very much required for the businesses operating in Dubai or anywhere in the
world. The accountant needs to constantly update the financial records; otherwise, there will be
too many accounts to deal with. The companies have to install the accounting software to process
all the financial transactions happening from and to the company. They have to also take care of
the receipts, disbursements, reimbursements, and all the receivables regularly too keep the
company financially healthy.
Reportedly, many people are confused in UAE about the recent modifications in the design and
format of financial record management. Some accounting standards are used internationally. Let's
understand the standards recommended for bookkeeping journal management and the creation of
financial statements.
So, the companies adopt different formats and rules to manage their accounting record. In this
regard, Generally Accepted Accounting Principles (GAAP) and International Financial Reporting
Standards (IFRS) are two of the most frequently used bookkeeping principles.
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
International Accounting Standards Board (IASB) has issued IFRS as the international accounting
standard for accomplishing the tasks and activities of financial management. It deals with
particular types of events and transactions for financial reporting. The IFRS explains a
comprehensive way of working for the accountants to maintain their records. The set of
principles are designed to ensure a common language that is well understood by the business
people and accounting companies in Dubai across the world.
ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
GAAP is comprised of all essential principles and rules to deal with the intricacy, complexities,
and accounting legalities for managing corporate accounting. GAAP is the foundation of
accounting methods as approved and used by the Financial Accounting Standards Board (FASB). The
deployment of GAAP requires extensive accounting services because it is used to manage balance
sheets, revenue recognition, and outstanding classification of items and shared estimations for
public disclosure.
IFRS ARE THE MANDATORY ACCOUNTING STANDARDS IN DUBAI UAE
The Securities and Commodities Authority (SCA) has made it mandatory for the businesses to comply
with IFRS as stipulated by the Central bank of the UAE. So, all the companies listed in the
NASDAQ Dubai (Formerly known as DIFX), Dubai Financial Market (DFM), or Abu Dhabi Securities
Exchange (ADX) is required to manage their accounting records in accordance with International
Financial Reporting Standards (IFRS). Therefore, all the companies listed legally on the Abu
Dhabi Securities exchange from 2003 onwards are supposed to submit the IFRS financial
statements.
Although it is not binding on the businesses that are not listed in the mentioned exchanges, it
is suggested to implement IFRS as soon as possible to avoid complications and ensure
transparency.
In the past, there was no pre-defined standard for the businesses in the UAE, but recently, the
state has recommended the business people to deploy IFRS for accounting tasks and activities.
Sometimes, the business people get confused to decide what to consider using for their financial
regulations compliance.
Accounting is essential for every organization located anywhere in the world, including the UAE.
It is a process where you record, measure, classify and verify financial information. Also,
accounting helps you know where you have used your company funds, and you can know the value and
nature of your company's liabilities. All the companies functional in UAE are supposed to adopt
the IFRS method.
In order to initiate the accounting, accountant will need the below mentioned documents:
1. Legal Documents of the Company:
- Certificate of Incorporation,
- Memorandum and Article of Association,
- Share Certificate,
- Trade License.
2. Invoices of expense for Company incorporation
3. Office Rental Contract and Invoice
4. Deposit slips if any paid to DEWA, Rent and etc.
5. Sales Invoices
6. Purchase invoices
7. Bank statements
8. Credit card statements if any
9. Petty Cash sheet if maintained
10. Invoices for expenses like Telephone and Utilities, Office expenses and any other expense
related to the company
11. Invoice for purchase of any company asset.
