Introduction 2009)” Therefore, private companies need to report their

Introduction

Doing business in the
United Arab Emirates is very strict and different as well in doing business in
the West. This is because the Emirates hold different culture and regulations
in their business industry. There are a lot of things to be remembered when
doing business in the country, and one of them is about the financial status of
the company and the framework for financial reporting. This is an important
factor to consider when doing business, not just in UAE, for every country as
governments have department or ministry of finance that overlooks the overall
financial status of the company that operates in their country.

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Moreover, in the UAE
authorities are very strict when it comes to audited financial statements that
are used for renewing licenses for private companies.

Laws and Regulations

For private companies,
it is expected, especially those in the Free Zone (FZ) of the country, to
“prepare their financial statements in accordance with International Financial
Reporting Standards (IFRS) (Crowe Horwath, 2013). It is with accordance with
the “UAE Commercial Companies Law No 2 of 2015, which came into force on 1 July
2015 that requires all companies to apply international accounting standards
and practices when preparing their accounts (IFRS, 2016).” This means that the
laws and regulations for the framework of the UAE’s financial reporting,
specifically for the private companies have been made into a jurisdiction.

Part of the regulations
for financial reporting is that, “Federal Commercial Companies Law No. 8 of
1984, together with certain ministerial decisions, requires that public and
private shareholding companies, limited liability companies and branches of
foreign companies file annual audited financial statements with the Ministry of
Economy and Commerce. (PKF, 2009)” Therefore, private companies need to report
their financial statements on significant Ministries as well.

On the other hand, for
the government, it is the Ministry of Finance that manages and develops the
financial resources of the Federal Government efficiently and creatively,
through the implementation of effective financial policies and premium national
and international relations for the protection and safety of the financial
system in the UAE in accordance with the best practices. (UAE Government, 2018)
This means that all laws and regulations passed by the MoF (Ministry of
Finance) is considered as the framework of financial reporting by the
government

In addition, it is
known that the MoF offers six services to support 56 ministries and federal
entities through the Departments of Policies and Accounting Standards, and
Financial Operation. These services aim to consolidate and develop procedures
according to regulations, resolutions and circulars to keep pace with the
changes, and ensure that all entities implement the financial procedures
according to a consolidated manual detailing all governmental financial
procedures and all the required steps for each procedure in terms of
description, attachments and legal reference (Ministry of Finance, 2018).”
Basically the MoF stands as the main authority figure for financial reporting
of the government entities.

Standards

When it comes to
standards it is expected of private companies to “maintain proper accounting
records (PWC, 2015)” and most of the reports are in the English language though
there is really no standard language for the report. As mentioned earlier, the
private companies are expected as well to abide with the IFRS, especially to
its framework in financial reporting. As noted, “the Conceptual Framework sets
out the concepts that underlie the preparation and presentation of financial
statements for external users (IFRS, 2018)” and this deals with the objective
of the reporting, the qualitative features of valuable financial information,
and the description, recognition, and dimension of the elements of the
financial statement.

On the other hand,
governments are required to adhere with the MoF as well for the standards of
financial reporting especially from the Departments of Policies and Accounting
Standards, and Financial Operations as part of the services offered by the MoF.
In addition, “the Department of Coordination of Fiscal Policies works with
ministries, federal autonomous authorities and local departments in the UAE
governments. (UAE Government, 2018)” And this proves that the government is
subject to the standards set by the Ministry of Finance and are liable to this
Ministry as well locally and as a whole.

 

 

Conclusion

In conclusion, the
analysis of the different laws and regulations, as well as of the standards of
financial reporting for both the private companies and the government only
shows the importance of financial reporting for the United Arab Emirates.
Moreover, even though it has a different culture when it comes to business, the
country still givs an opportunity and an advantage for private companies as
they were asked to adhere to the IFRS which is acknowledged in many countries.
We have learned as well that doing business with the United Arab Emirates may
be strict but it is also almost the same with other countries in a way that
knowing, understanding and following the rules and regulations and the
standards set by the IFRS and the MoF are the best way to keep a company
working and operating in the country. Failure to adhere to these may result to
negative consequences that would never be beneficial for the company or the
government as well.