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What are International Financial Reporting Standards (IFRS), and why do they matter?

What are International Financial Reporting Standards (IFRS), and why do they matter?
Co-Founder & CEO movingo
Editor
Author
Iakov Kukushkin
Copywriter, Journalist
Feb 28, 2025
According to the World Trade Organization's (WTO) report on the World Trade Outlook, in 2023, the UAE ranked number 14 for global merchandise trade.
International trade would not be possible without common standards, like accounting ones. In this article, we'll talk about those standards and why they're important for your business, even if you're operating in the UAE market only.

What is IFRS?

International Financial Reporting Standards (IFRS) is a set of rules that businesses use to report their finances. These standards make it easier to compare financial reports from different companies around the world. It's like a universal financial "language" that is used in over 140 countries.

Each country used to have its own way of reporting its finances. It takes a lot of time and resources to adapt documents from one country's standards to another. IFRS simplifies it by creating one global standard.

For instance, IFRS requires companies to show how they calculate their assets, liabilities, revenue, and expenses. That way, investors and other stakeholders can get a full and accurate view of a company's financial situation.

That's why IFRS really matters:
  1. Compliance with the law: IFRS is part of the Federal Tax Authority (FTA) regulations, so everyone has to follow it.
  2. Transparency and trust: IFRS makes sure financial reports are easy to read and understand. That helps build trust between companies, investors, and government agencies.
  3. Global recognition: Companies that follow IFRS demonstrate their commitment to international best practices. It helps attract global customers and investors.
  4. Smooth business operations: In the UAE a lot of businesses do business internationally, and IFRS makes it easier to communicate and work with global partners.

What are the IFRS requirements?

Companies using IFRS must:
  • Prepare financial statements that include a balance sheet, an income statement, a cash flow statement, and a statement of changes in equity.
  • Follow the specific rules for recognising revenue, measuring assets and liabilities, and revealing information.
  • Make sure the financial reports are accurate, unbiased, and mistake-free.
You don't need to do everything on your own. We can help, just drop us a text 😉

Benefits of IFRS accounting standards

1
Compliance with the law.
IFRS is part of the Federal Tax Authority (FTA) regulations, so everyone has to follow it.
2
Transparency and trust.
IFRS makes sure financial statements are easy to read and understand, which helps build trust between companies, investors, and governments.
3
Global recognition.
Companies that use IFRS show that they follow international standards. This helps them attract customers and investors from all over the world.
4
Smooth business operations.
In the UAE a lot of businesses do business internationally, and IFRS makes it easier to communicate and work with global partners.

List of IFRS standards

There are over 40 IFRS, also called International Accounting Standards (IAS). Here are some key ones:
For the full list, visit the official IFRS website here.

What's necessary to comply with the IFRS?

  • Being transparent about financial information.
  • Keeping up with the latest IFRS updates and making sure our practices are in line.
  • Compliance is crucial for companies that do business with or in countries that require IFRS.
It's almost impossible to keep up with all the regulations unless you have professional accreditation or a qualified accountant to help you out. It can also get you fined up to AED 20,000, so an expert will save you time and money.
We have the experience and qualifications (ACCA, etc.) to get your paperwork in line with FTA and IFRS rules. How about it?

What financial reporting standards are used in the UAE?

The UAE has adopted IFRS as the standard for financial reporting. It's a key part of FTA regulation, and all companies in the UAE have to follow them.
Also, many Free Zone companies and international companies operating in the UAE use IFRS to meet international and local standards.

What is the difference between GAAP and IFRS?

1
Scope:
  • GAAP (Generally Accepted Accounting Principles) primarily used in the United States.
  • IFRS used globally.
2
Approach:
  • GAAP is rules-based, which means it gives you a lot of specific instructions on how to do accounting.
  • IFRS is more about principles, focusing on the "spirit" of the rules rather than following them strictly.
3
Other differences:
  • Revenue recognition, inventory valuation, and financial statement presentation can differ between GAAP and IFRS.

Why IFRS matters to you

If you're a freelancer, small business owner, or an individual in the UAE, IFRS is your best friend for a few reasons. To understand, let's just think about this:
  1. Work with global customers? If you're billing international clients, they might expect you to use IFRS rules when sharing financial details. For example, your financial statements should show how you handle revenue and costs in a way they can easily understand.
  2. Planning to scale your business? If you plan to grow your freelance work into a small business, learn more about IFRS now to save yourself some headaches later. Many banks and investors in the UAE want financial reports that follow IFRS guidelines.
  3. Need to file corporate taxes? Of course, yes — every business in the UAE has to file Corporate Tax returns. In some cases, freelancers in the UAE might not worry about filing taxes. But, if you keep organized with records that follow IFRS standards can help you prepare for the future growth of your business.

How to use IFRS in your business

Here are some simple ways to get your work in line with IFRS:
  1. Organize your records: Keep detailed records of your income, expenses, and invoices. Use accounting software that supports IFRS, like QuickBooks or Zoho Books.
  2. Understand revenue recognition: Report your income accurately. For example, if a client pays you in advance, record it as "unearned income" until you deliver the work.
  3. Learn the basics or get assistance: Knowing the basics is good for everyone, but you don't have to be an expert. Many accounting professionals in the UAE specialize in IFRS and can guide you.
  4. IFRS is more than just financial rules. Whether you're working with foreign clients, trying to grow your business, or just wanting to get your finances in order, IFRS can help you comply with FTA regulations. Although all the rules are there, it's pretty hard to follow them exactly by yourself. If you're new, freelance, or don't have a tax expert on your team, it can be quite challenging.

Easy way to follow IFRS

The best way to make sure you follow all the complicated rules is to let a professional do it for you. We offer clear and straightforward accounting services in the UAE at transparent prices. Our services are optimised for small and medium businesses and independent professionals.

What you'll receive:
  • Bookkeeping and financial record maintenance: You'll get precision accounting with an accurate record of every financial transaction. We handle daily data entry, transaction tracking, and ledger management to provide you with a solid paper trail for future reporting.
  • Monthly financial reporting: Every month, quarter, and every year, we send you detailed financial reports. This helps you make smart decisions about your business's financial health.
  • Accounts payable and receivable management: Smooth cash flow is critical. We manage billing, collections, and payments, giving you peace of mind and a steady cash flow.
  • Tax filing and compliance: We take care of your tax needs: VAT registration, regulatory reports, tax filing and compliance, etc. So you comply and out of trouble.
  • Payroll processing: Your payroll is paid on time and compliant while reducing administrative overhead.
  • Audit preparation: Prepare for audits with ease. Movingo ensures that all records are accurate, complete, and ready for review. We reduce the stress of audits and help you focus on what matters.
Ready to make your accounting easier? Why not schedule a free intro call and see if we can help you take your business to the next level? We'll handle the numbers so you can focus on growing your business.

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