Case Study - Navigating IFRS Complexities for Accurate Year-End Financial Statements

Overview

A publicly-listed Company operating across multiple jurisdictions faced a significant challenge in preparing its year-end financial statements in accordance with International Financial Reporting Standards (IFRS). The complexity of IFRS and the need to consolidate financial information from various subsidiaries and regions posed a considerable problem. It was difficult for the management to complete the preparation of financial statements in accordance with IFRS requirements, which were supposed to be audited by a Big Four firm.

Problem Statement

The primary challenges faced by the Company in preparing its year-end financial statements included:

• Complexity of IFRS: The evolving nature of IFRS standards and the intricate requirements made it challenging for the Company to ensure compliance and consistency across the group's financial reporting.
• Consolidation of subsidiaries: The Company had subsidiaries in different countries. Consolidating their financial statements into a single set of IFRS-compliant financial statements was a complex task.
• Disclosure and presentation: Ensuring that the financial statements complied with all disclosure requirements and were presented in accordance with IFRS standards was a daunting task.

Technical Solution

As an IFRS expert, we provided the following solutions to address these challenges:

• IFRS expertise: We closely monitored the latest updates to IFRS and ensured that the Company’s accounting practices were aligned with the latest requirements. This involved quarterly training sessions for the finance team and continuous communication on evolving standards.
• Consolidation process: We established a comprehensive consolidation process, which included translating subsidiary financial statements from different currencies to Rial Omani, eliminating intercompany transactions, and ensuring consistency in accounting policies.
• Management disclosure: We developed a systematic approach to fulfill disclosure requirements. This involved creating disclosure checklists tailored to specific standards and conducting thorough reviews to ensure completeness and accuracy.
• New standards adoption: We assisted the Company in adopting new IFRS standards, ensuring correct implementation of standards such as IFRS 17 for Insurance Contracts. This involved thorough assessment, data collection, and system changes where necessary.

Results

The technical expertise provided during the preparation of year-end financial statements for the Company resulted in significant outcomes:

• The Company successfully complied with the complex requirements of IFRS, ensuring that its financial statements were fully aligned with international standards.
• The consolidation process was streamlined and efficient, providing a clear and accurate picture of the group's financial performance and position.
• The financial statements were presented in a transparent and comprehensive manner, increasing stakeholder confidence and facilitating better decision-making.
• By streamlining processes and ensuring compliance, the Company improved the efficiency of its financial reporting, reducing the time and resources required for year-end financial statement preparation.

In conclusion, the technical expertise provided during the year-end financial statement preparation enabled the Company to overcome the challenges associated with IFRS compliance, subsidiary consolidation, and complex disclosure requirements.

This case study underscores the importance of engaging IFRS experts to navigate the complexities of international financial reporting standards, ensuring transparency and compliance for listed entities operating in diverse environments.

What we did