Dubai Investments: Accounting Standards and Policies Essay

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Introduction

Redfern construes the Dubai Financial Market (DFM) as a physical stock exchange stationed at Dubai, UAE (2008). Since its inauguration in the year 2000, DFM has flourished to encompass 67 publicly traded institutions such as the Dubai Investments. Dubai Investments PJSC (DI), which kick-started operations on 16 July 1995, has over 20,700 investors (Annual Report, 2015). Regarding DI’s 2014 Annual Report, this paper expounds on the conventional application of the IFRS accounting policies and standards by the corporation.

Body

DI’s Auditors and Accounting Standards

For the year 2014, Dubai Investments recruited KPMG auditors to formulate and amalgamate their financial statements from the distinctive subsidiaries (Redfern, 2008). The KPMG (Big Four auditors) group prepared the report in compliance with the International Financial Reporting Standards. The auditor’s report depicts that the statements consented to statutory regulations and impartial representations of the auditee’s fiscal condition and operations (Annual Report, 2015).

Accounting Policies

The company mentions that the subsidiaries amended varied accounting policies, wherever necessary, to harmonize the distinct entities in the formation of the statements (Annual Report, 2015). The procedures involved include revenue, government grants, investment properties, foreign currency, provisions, inventories, leases, goodwill, finance income, and basis of consolidation.

Amounts Corresponding to Income Tax

The values corresponding to the income levies obtained from the profit and loss statement and balance sheet (current liabilities) are AED 1,865,891 and AED 2,405,278 respectively (Annual Report, 2015). As regards the statement of cash flows, the amount parallel to the income tax is AED 987,622; a figure derived from the total of the operating outflows listed under the ‘operating activities.’

Deferred Tax Assets and Liabilities

Dubai Investments lists various deferred tax assets and liabilities in its ‘notes’ segment such as employee benefits costs, accelerated depreciation, pension costs, insurance receivables, and product claims (Annual Report, 2015).

Basic and Diluted Earnings per Share

Earnings per share (EPS) indicate a firm’s value and exist in a primary and diluted form. The basic EPS expresses a business’s returns for every dividend of its stock while the diluted EPS is the turnover per the fraction of the outstanding convertible securities, expounds Redfern (2008). The basic and diluted EPS for Dubai Investments are AED 0.35 and 0.33 respectively (Annual Report, 2015). As regards calculations, DI divided the difference between the net income and preferred dividends by the gross payable shares to reveal the diluted EPS (Annual Report, 2015). The firm split the net profits by the absolute outstanding shares to obtain the primary EPS.

The Full Disclosure Principle

As Redfern (2008) clarifies, the disclosure principle necessitates a broad divulgence of an entity’s financial statements, quarterly earnings reports, and schedules to guide on proper investments decisions. The preceding ten years has experienced an expansion of the disclosure doctrine, owing to the new guidelines implemented by the FASB. The Financial Accounting Standards Board has incorporated stringent disclosure regulations to safeguard against fiscal catastrophes following the bankruptcy reorganization and loopholes encountered in Enron Corporation (Redfern, 2008).

Temporary and Permanent Differences

Temporary differences ensue when a firm records income on mismatched dates for both the financial statements and tax returns, projects Redfern (2008). An example is when a CPA designates down payments as ‘proceeds’ on the tax return but does not register it in the statement. By contrast, permanent differences emerge when financial statement expenses do not appear on tax returns such as when statements reflect justified tax penalties as ‘expenses’ whereas tax returns do not (Annual Report, 2015).

Future Taxable and Deductible Amounts

Future deductible amounts such as depreciations are a type of temporary difference, where an entity inscribes an overhead on the contemporary tax return but accounts for it in the forthcoming financial statement (Redfern, 2008). In opposition, the future taxable amounts refer to those proceeds earned for business accounting intents but shelved for tax accounting objectives (Redfern, 2008).

Conclusion

The DI’s operations are in order following the detailed verification and IFRS compliance by the auditors. The 2014 Annual Report also registers a boost in the gross profits and net income.

References

Annual report. (2015). Web.

Redfern, B. (2008). Dubai Investments. Middle East Economic Digest, 52(16), 28-33.

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