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.

The DMTT is the UAE's adoption of the OECD's Pillar Two framework for in-scope multinational enterprise groups, effective for financial years starting on or after 1 January 2025. Where an entity sits within an in-scope group, IAS 12's temporary exception from recognising and disclosing deferred tax related to top-up taxes becomes directly relevant to how the IFRS financial statements are prepared and disclosed, alongside whatever the group's own Pillar Two workstream is calculating centrally.

End-of-service gratuity is a statutory unfunded benefit under UAE labour law that, in substance, is a defined-benefit-type obligation under IAS 19 (or the simplified equivalent under IFRS for SMEs Section 28), rather than a simple year-end accrual. Depending on materiality and the entity's framework, this can require discounting and actuarial-style assumptions rather than an undiscounted running total.

Yes. Where an entity carries goodwill, indefinite-life intangibles, licences, or other long-lived assets, we assess whether an impairment indicator exists and, where required, help structure the cash-generating unit analysis and recoverable amount workings needed to support (or adjust) the carrying value at the reporting date.

Where a UAE entity holds property to earn rental income or for capital appreciation rather than for use in its own operations, IAS 40 requires a choice between the fair value model and the cost model, applied consistently, with fair value changes (under the fair value model) recognised through profit or loss rather than other comprehensive income.

Yes. Under IAS 21, we confirm the entity's correct functional currency, identify foreign-currency monetary items (typically INR, GBP, EUR, or USD balances in group and cross-border structures), and confirm the retranslation approach at each reporting date is correctly applied, including any presentation currency translation needed for group reporting.

IFRS 2 requires share-based payment arrangements to be measured, typically at grant-date fair value, and expensed over the vesting period, rather than only recognised when options are exercised. We review the scheme rules, vesting conditions, and grant documentation to determine the correct measurement basis and expense recognition pattern.

IFRS 8 segment reporting requirements generally apply to entities whose debt or equity instruments are traded in a public market, or that are in the process of filing for a public listing. For most privately held UAE mainland and free zone entities, formal IFRS 8 segment disclosures are not mandatory, though management may still find segment-style internal reporting useful for its own decision-making.

Where relevant, yes. A standard change that moves items on or off the balance sheet (IFRS 16 leases being the clearest example) can affect leverage, gearing, or other covenant ratios defined in existing loan agreements, so we flag any covenant impact identified during the assessment for management to discuss proactively with lenders rather than discovering a technical breach at the next compliance certificate.

For UAE real estate developers, RERA escrow and project completion requirements sit alongside, not instead of, IFRS 15 revenue recognition — the developer still needs to determine whether revenue from a unit sale is recognised over time or at a point in time based on the specific contract terms and control transfer criteria, independent of the RERA escrow mechanics governing cash handling.

A dormant or low-activity entity generally has fewer transactions to assess, but it still needs its financial statements correctly prepared under the applicable framework, and any standard transition (including a first-time IFRS 1 adoption if it is preparing audited accounts for the first time) still applies in principle, even if the quantified impact is modest.

Yes. Where an assessment reveals that the entity's broader accounting policy documentation is thin or out of date, we can extend the deliverable to formalise the specific policy area addressed into a written accounting policy manual section, which strengthens audit readiness for future periods.

Where a standard's requirements (for example, IFRS 16 lease schedules or IFRS 9 expected credit loss provisioning) are more practically managed through a system module than a manual spreadsheet, we identify that need in the impact assessment and can coordinate with the client's IT or ERP team on the required system logic, though the system implementation itself typically sits with the client's own IT function or a specialist ERP partner.

Financial services and fintech entities — particularly those regulated by the UAE Central Bank, DFSA, or FSRA — often face additional IFRS 9 expected credit loss modelling requirements, more granular financial instrument classification questions, and regulator-specific disclosure expectations layered on top of standard IFRS, which we scope specifically rather than applying the same approach used for a trading or services business.

Not directly — the impact assessment is independent of who holds the audit appointment, and the technical memo and workings remain valid regardless of which firm signs the audit opinion. We simply redirect the auditor-coordination step (sharing the position with the incumbent auditor ahead of fieldwork) to the new auditor once the change takes effect.

Standalone. IFRS advisory and impact assessment engagements are commissioned independently of any audit or ongoing accounting relationship with PNPC — a client can engage us purely for the technical assessment while their day-to-day accounting and statutory audit continue elsewhere.

A DMTT applicability check is typically scoped as a discrete, narrower assessment — confirming whether the entity or group meets the in-scope thresholds and, if so, what IAS 12 disclosure and temporary exception treatment applies — rather than bundled automatically into every IFRS engagement, since not every UAE entity sits within an in-scope multinational group.

For a genuinely immaterial or repetitive transaction, informal application by an experienced in-house accountant may be reasonable. For anything involving real judgement — lease classification, revenue recognition timing, financial instrument classification, or a new standard's transition — an informal, undocumented application risks an inconsistent or incorrect position that surfaces as an audit finding, with no documented reasoning to support it if challenged later.

Yes. Where a prior-period transaction's accounting treatment is now in question — whether flagged by a new auditor, an internal review, or a due diligence process ahead of a transaction — we can assess the correct treatment and, where a genuine error is confirmed, help quantify the prior-period correction required under IAS 8 (accounting policies, changes in accounting estimates and errors), distinguishing a true error from a legitimate change in estimate or policy.