Essay Example on Early 1990's Egypt had been reflected as a non capital Market









Early 1990's Egypt had been reflected as a non capital market however within time this was changed as there was a massive gap in the private sector which needed to be focused on for example an amendment of their accounting systems The accounting systems are there to help Egypt with recording its transactions and being able to understand the ingoing and outgoing costs It also gives individuals an insight of understanding the business better which leads to better decision making and opportunities This led to attracting foreign traders and boost their level of confidence to invest in the Egyptian capital market Therefore a Egyptian law was put in place corporate law 1981 Capital market authority 1992 In accordance to this law it is stated that all companies in Egypt whether that is listed or unlisted need to prepare financial statements in accordance with the Egyptian accounting standards Moreover these statements are then audited by a certified public accountant according to the Egyptian auditing standard Deloitte 2017 The Egyptian standards are developed by the very own standards committee of the Egyptian society of accountants and auditors The head of committee which is the minister of investment is responsible of reviewing and approving as well as issuing the standards However as this is an accounting rule based system where standards have rules which need to be followed and these rules are seen to be influenced by the Egyptian Law Therefore obeying by the rules would result in accuracy in reporting and reduce the aggressiveness in reporting Over the years Egypt has developed into one of the largest economies in the Middle East which had attracted many foreign trades and organisations In the years between 1997 2002 there were stages where 

Egypt decided to harmonize its national accounting standards with IAS while ensuring that specific characteristics of the Egyptian environment were taken into account UNCTAD 2008 Even though Egypt had tried its best in harmonization there was still some limitation s which were standing due to the country's law and regulations This resulted the Egypt standards committee to release and replace the standards from 1997 2002 with a complete set of new Egyptian Accounting Standards Therefore the country faced a lot of changes After 9 years Egyptian accounting standards were updated in 2016 which are best described by Mohammed Yahya as now are compatible to a large extent with modern international standards and that all companies shall abide by these standards The new standards will improve the quality of financial statements and standardized treatments and accounting policies KPMG 2016 As a country Egypt has shown massive improvement significant efforts to align corporate financial reporting requirements with the International Accounting Standards IAS and to close the compliance gap in both accounting and auditing practices UNCTAD 2008 The standards were set out of 39 standards and would be applied by the 1st of January and that all organisation who applied must begin its fiscal year from this date or after it These standards included a frame which would support the preparation and presentation of financial statements as well as a special standard for small medium sized enterprises KMPG 2018 Therefore with all the changes to the system and the fact that these changes were introduced slowly financial auditors and those who work closely with the standards were granted time to understand the new standards and offered to go on training courses 

However it is stated by Deloitte 2017 that following the laws regulations which are governed by the country there was still differences between the EASs IFRS There would always be some sort of differences between the standards as the laws of every country are different for example in Egypt the law adheres to the culture living requirements and economy and in UK the law may not adhere to these for example culture Mohammed Yehva who is the head of standards committee has stated that even in the new version of the standard there are still two particular differences between the IFRSs EASs The first difference which is discussed is the dividend paid for the staff and board members are not included as expenses in the income statement but it is included as profit distributions and that is pursuant to the legal requirements Whereas the second difference is related to the financial leasing standard which is not the same as IAS this is because law no 95 of 1995 on financial leasing include accounting treatments which are quite different from the prevailing international treatments

As the lessor shall retain the leased asset in his registers and depreciate it The tenant shall bear the profit or loss and it shall be considered as expenses related to that period in which it was paid in KPMG 2016 However the most common difference between the standards was language barrier As the standards in Egypt were communicated in Egyptian this made it very difficult for other companies foreign to trade with the Egyptians as it would need to be translated for companies to understand Also IFRS standards are communicated in English which made it hard for the people in Egypt to understand Disclosure is a key area which Egypt is currently improving on as the quality was not at a standard in comparison to the IFRS which is highly legitimised and is brought to attention One of the major issues faced by global stakeholders could be figures on income statements not being convenient as they may not understand the language or terminology it is written in And to convert these would not only be time consuming but will cost too The best way would be to actually use the IFRS translation process which will save a lot of time

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