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IFRS: From a rare luxury to a bare necessity

CA Vishal Thakkar
Filed on August 24, 2020 | Last updated on August 24, 2020 at 12.01 pm

CA Vishal Thakkar, CEO, ConTeTra Universal LLP

The organisation's standards contribute to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation

When it comes to knowledge upgrades for finance professionals in the Middle East, International Financial Reporting Standards (IFRS) simply tops the list. Why? The answer is simple. It is ever-evolving, ever-challenging, and most global. Let's look at why IFRS, over a period of time, has become a bare necessity from a rare luxury.

1 Taxation Impact
 As the Middle East welcomes the taxation regime and most countries have now embraced Value Added Tax (VAT), accounting started demanding more transparency as governments across the Gulf Peninsula started vetting the books.

2 Opening of Economies
 Given the surprising openness of business in recent years, a lot of corporate action started happening in the region. Matured economies from Europe and other western countries wanting to have a bigger footfall in the region brought in the global standards which they followed back home. This made transactions easier, accounting smoother and mergers and acquisitions faster.

3 Geographical Advantage
The Middle East is right at the centre, bridging the gap between West and East, literally, thus catapulting the region into fast-paced upgrade to the latest set of regimes in the finance space. Opportunities in finance space created a need for regulatory expertise at all levels. Hence, IFRS became more and more essential.

4 Cultural Integration
With the movement of fancier gadgets from East to West and diverse people from West to East brought about the mindset of transparency, accountability, and fairness in financial reporting. This led to the upgradation of various CFOs and Finance Presidents at the gargantuan corporations in the region initially. Later it trickled down to junior levels and leaner corporations.

5 Surge of Advancement
With the first space exploration of the Arab world to the first nuclear power plan, set off an urge of advancement in all walks of life. Finance, being the lifeblood of all human activities, was no different. Every aspiring finance professional worth his salt carries the urge to boast the latest in terms of applied knowledge, skill, and banter to handle the most complex and intricate transactions and structures.

6 Level Playing Field
The ever-evolving nature of IFRS has created a level playing field for finance professionals of the Middle East to not just keep up with the Joneses of the West, but to surpass them and pioneer in the early adoption of the newer standards.

7 Ever-Evolving Standards
This aptly comes as a next point, since the modern trade and commerce embraces latest technologies like Blockchain, Artificial Intelligence in transaction processing, the newer standards play a pivotal role in ensuring that the transactions continue to remain smooth. However, an upgrade to finance professionals is mandated, given the complexity of business practices intertwined in the hi-tech ecosystem.
8 Scams and Frauds at global level
Large-scale lying and cheating of investing public to add more zeros to the bank has triggered many reforms, which have led to the creation of a more robust and a transparent system. Regulators and finance experts around the world have resorted to more disclosures and tighter controls to save the entity from high-level frauds carried out by people who are entrusted with resources.

9 Operational Necessity
Many corporations have lines of reporting back in the West where the holding companies require reporting packs as per the necessary accounting standards prevalent in the home country. This has also triggered a necessity of IFRS upgrade right down to the transaction processing level in the organisation in the Middle East.

10  Attracting relevant Investors
Fund managers looking to invest the wealth of hedge funds in emerging economies need to compare corporations in different geographies to churn out the right mix of stocks in their portfolios. Compliance with IFRS irons out any differences arising due to different rules followed in preparing the financial statements and maintaining books of accounts.
Riding the IFRS Wave  

As a finance professional, when you read the above 10 reasons, you are naturally inclined to steer your surfboard to ride the IFRS wave before it breaks. The good news is that IFRS is here to stay, and you still have sometime before the first wave crashes. If you can pick it up in time, you can still ride atop this wave. Let's see what the key benefits are in riding the IFRS wave:

1 Global Feather in Your Cap
In a hyper-competitive space of crunching numbers, an edge is needed to be noticed and have the focus stay on you. A global qualification, in the form of Diploma in IFRS or DipIFR, puts a global feather in your cap, thereby broadening your professional scope geographically and monetarily.

2 Enhances Organisation's Reputation
 When your current company nominates you for an IFRS upgrade, it is establishing its identity as a progressive corporation that is run by globally qualified professionals and has a thriving culture of continuous upgrade and improvement.

3 Globally Aligned Thought Process
 You tend to get attuned to global best practices and bring the relevant skill set required to drive compliances, business transactions, and reporting structures needed to keep yourself, your team, and your company relevant in trying times.

4 Catapulting Career Progression
The upward movement, both internal and external, gets accelerated when a mere thought of pursuing a global career forms in your mind. A simple browse on the career portal reaffirms that the surest way to accelerate career today singles out and folds into IFRS for every finance professional in the Middle East.

5 Demand-Supply Mismatch
As you put down this magazine for at least the next two to three financial years, there is going to be a high demand of IFRS qualified finance professionals as domain has just witnessed dawn and the sun is just now rising. You still have a chance to frame the perfect sunrise picture for your coffee table.

6 IFRS Beyond Accounting
There is a clear shift of all finance professionals from backroom to board room, hence it is imperative to understand the nuances of IFRS because every transaction in IFRS reporting has got a commercial and business substance.
Final Verdict

As the old song from the movie Jungle book goes, "the bare necessities of life." the verdict stands clearly written on the wall; IFRS is the way forward for the middle east region. The beautiful convergence of opportunity meeting hard work is happening once more. But again, the question remains, "Are you ready to grab it?"

CA Vishal Thakkar is the CEO at ConTeTra Universal LLP

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