Muscat: To ensure compliance with international financial reporting standards in the Sultanate of Oman, the Financial Services Authority (FSA) has issued Decision No. (2/2025), reaffirming the adoption of International Financial Reporting Standards (IFRS) as the framework for preparing financial statements for all companies and institutions in general.
However, small and medium enterprises (SMEs) may apply the simplified IFRS standards (IFRS for SMEs). This decision is issued based on Article 11 of the Accounting and Auditing Profession Regulation Law, enacted by Royal Decree No. 77/86.
The IFRS for SMEs is a simplified version of IFRS, specifically designed to meet the needs of small and medium-sized enterprises that do not trade their securities in financial markets and are not required by any regulatory or supervisory body to comply with full IFRS standards.
This initiative aims to reduce the financial and administrative burden on SMEs by guiding them toward preparing their financial statements using the simplified framework while minimizing financial disclosure requirements. At the same time, it encourages these businesses to adopt international standards and maintain proper financial records in line with globally recognized regulations. This, in turn, facilitates better understanding and comparison of financial statements by stakeholders, including banks and financial institutions, enabling them to provide more tailored services to SMEs.
Furthermore, this measure is expected to simplify the auditing process and reduce audit costs for SMEs, as the requirements for IFRS for SMEs are less complex compared to the full IFRS standards, which are primarily designed for public companies and large enterprises.
According to the decision, entities preparing financial reports must disclose the reasons and justifications for choosing the appropriate financial reporting framework or transitioning from one framework to another. Additionally, they must adhere to the principle of consistency in the selected reporting model, ensuring these justifications are included in their annual financial reports.
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