IFRS Financial Reporting Requirements for Companies in Oman

Financial reporting errors can cost businesses more than time. Incorrect revenue recognition, inaccurate asset valuations, incomplete disclosures and poorly maintained accounting records can lead to audit adjustments, regulatory complications and unreliable financial decisions. Companies operating in Oman need financial statements that accurately reflect their financial position and comply with applicable International Financial Reporting Standards (IFRS).

Oman’s Commercial Companies Law establishes IFRS as the accounting framework for corporate financial statements. The Financial Services Authority (FSA) also provides regulatory guidance on applying financial reporting standards, including the use of IFRS for SMEs where permitted.

For businesses managing complex transactions, expanding operations or preparing for statutory audits, understanding the IFRS reporting requirements in Oman is essential. Companies need appropriate accounting policies, accurate transaction records and complete financial disclosures to meet their reporting obligations.

What Are the IFRS Financial Reporting Requirements in Oman?

International Financial Reporting Standards are accounting rules issued by the International Accounting Standards Board (IASB). They establish how businesses recognise, measure, present and disclose financial information.

Oman’s Commercial Companies Law, issued under Royal Decree 18/2019, provides the statutory basis for IFRS financial reporting. Article 209 requires companies to maintain financial records reflecting their transactions and financial position and prepare financial statements according to IFRS.

The main reporting responsibilities include:

• Maintaining accurate financial records and supporting documentation.
• Preparing financial statements using the applicable accounting framework.
• Applying appropriate accounting policies to business transactions.
• Presenting financial performance and financial position accurately.
• Providing financial records to the appointed external auditor.
• Meeting applicable financial disclosure and corporate reporting obligations.

Article 213 also requires companies to retain financial records for ten years from the end of the relevant financial year.

Which Companies Must Follow IFRS Standards in Oman?

The Commercial Companies Law establishes IFRS as the corporate financial reporting framework. Its requirements extend beyond publicly listed businesses.

However, the FSA’s Decision No. Kh/2/2025, issued on 10 February 2025, introduced provisions allowing accounting and auditing professionals to adopt the IFRS for SMEs model, provided it does not conflict with regulatory or supervisory requirements. Financial statements must explain the reasons for selecting the framework and its financial implications.

Public Joint Stock Companies

Public joint stock companies and listed businesses must follow applicable full IFRS requirements and additional financial reporting and disclosure rules.

Their responsibilities include preparing annual financial statements, providing relevant financial disclosures, maintaining internal controls and meeting applicable interim reporting obligations.

Accurate reporting is particularly important because investors, shareholders and regulators rely on published financial information to evaluate company performance.

Private Limited Companies

Private limited companies must also comply with the financial reporting requirements established under the Commercial Companies Law.

Private ownership does not automatically exempt a company from IFRS reporting. Businesses must assess their regulatory position and determine whether full IFRS or the permitted IFRS for SMEs framework applies.

Small and Medium-Sized Enterprises

IFRS for SMEs offers a simplified accounting framework for eligible businesses. It reduces certain reporting complexities while maintaining recognised accounting principles.

Under the FSA’s 2025 decision, professionals can adopt this framework where regulatory and supervisory requirements permit. Companies must document the selection and explain its financial implications in their statements.

What Financial Statements Must Companies Prepare Under IFRS?

IFRS reporting requires companies to present their financial position, performance and cash movements through a structured set of financial statements.

Article 210 of the Commercial Companies Law identifies the principal financial statements and accompanying explanations.

1. Statement of Financial Position

The statement of financial position, commonly known as the balance sheet, presents a company’s assets, liabilities and equity at the end of a reporting period.

It includes cash, receivables, inventory, property, equipment, loans, trade payables and shareholders’ equity.

Companies must classify and measure these balances according to applicable accounting standards. For example, property and equipment require appropriate depreciation calculations, while inventory needs consistent valuation.

2. Statement of Profit or Loss and Other Comprehensive Income

This statement presents revenue, operating expenses, finance costs, tax expenses and the resulting profit or loss.

Accurate revenue recognition is essential. Under IFRS 15, businesses must recognise revenue based on the satisfaction of contractual performance obligations.

For example, a construction company working on a long-term project must recognise revenue according to the applicable contract accounting requirements rather than recording the entire contract value when receiving an advance payment.

3. Statement of Cash Flows

The cash flow statement explains how money enters and leaves a business during the reporting period.

It classifies transactions into:

• Operating activities, including customer receipts and supplier payments.
• Investing activities, including purchases and sales of assets.
• Financing activities, including borrowings, repayments and dividends.

4. Statement of Changes in Equity

This statement records changes in shareholders’ equity, including share capital movements, retained earnings, reserves and dividend distributions.

It provides shareholders with a clear record of changes in their ownership interests and the company’s accumulated financial results.

5. Notes to the Financial Statements

The notes explain the figures presented in the main financial statements. They include accounting policies, significant estimates, related-party transactions, financial commitments and other disclosures required by applicable IFRS standards.

Key IFRS Standards That Affect Companies in Oman

Different IFRS standards apply depending on a company’s activities and financial transactions. Understanding these requirements helps businesses maintain consistent accounting practices.

IFRS 15: Revenue Recognition

IFRS 15 establishes a five-step model for recognising revenue from customer contracts. Companies must identify contracts, determine performance obligations, establish transaction prices, allocate those prices and recognise revenue when obligations are satisfied.

For example, an equipment supplier providing installation services must assess whether equipment delivery and installation represent separate performance obligations.

IFRS 16: Lease Accounting

Businesses renting offices, warehouses, vehicles or equipment need to consider IFRS 16.

The standard generally requires lessees to recognise right-of-use assets and corresponding lease liabilities, subject to specific exemptions.

Companies must assess lease agreements, calculate relevant balances and apply appropriate accounting treatments.

IFRS 9: Financial Instruments

IFRS 9 covers financial asset and liability classification, measurement and impairment.

Businesses selling products on credit must assess expected credit losses using relevant customer information, historical payment patterns and forward-looking data.

IAS 12: Income Taxes

IAS 12 addresses current and deferred income tax accounting. Companies must assess temporary differences between the carrying values of assets and liabilities and their corresponding tax bases.

IAS 16: Property, Plant and Equipment

IAS 16 establishes requirements for recognising, measuring and depreciating tangible business assets. Companies need accurate asset registers, useful-life estimates and consistent depreciation policies.

How Does IFRS Implementation in Oman Work?

IFRS implementation in Oman involves reviewing existing accounting practices, identifying reporting gaps and establishing procedures that meet applicable accounting standards.

A structured process helps businesses avoid year-end corrections and maintain accurate financial information.

Step 1: Review Existing Accounting Records

The process begins with an assessment of accounting records, general ledgers, trial balances, financial statements and supporting documents.

The review identifies weaknesses such as incomplete lease information, inaccurate inventory records, unreconciled accounts and insufficient transaction documentation.

Step 2: Conduct an IFRS Gap Analysis

An IFRS gap analysis compares existing accounting practices with applicable reporting requirements.

It examines revenue recognition, asset valuation, lease accounting, financial instruments, employee benefits, tax accounting and financial disclosures.

The findings establish which accounting policies and procedures need improvement.

Step 3: Develop Accounting Policies

Businesses need documented accounting policies explaining how financial transactions are recognised, measured and presented.

For example, a trading company needs appropriate policies for revenue, inventory, receivables and impairment. A construction company also needs policies addressing contract revenue and project costs.

Step 4: Make Necessary Accounting Adjustments

Companies must record adjustments to correct accounting differences and comply with applicable IFRS requirements.

These adjustments can include recognising lease liabilities, revising depreciation calculations, correcting revenue recognition, calculating expected credit losses and recording deferred tax balances.

Step 5: Update Accounting Systems and Internal Controls

Reliable accounting software and internal controls support accurate financial reporting.

Businesses need clear procedures for approving transactions, recording journal entries, reconciling accounts and maintaining supporting documents.

Step 6: Prepare and Review Financial Statements

The final stage involves preparing financial statements, checking account balances, reviewing disclosures and verifying supporting schedules.

An internal review before the statutory audit helps identify missing information and accounting inconsistencies.

MFN Auditing provides IFRS advisory services to support businesses with first-time adoption, accounting policies, technical accounting matters and financial reporting.

Common IFRS Compliance Challenges for Businesses

Maintaining IFRS compliance requires regular attention to accounting records and reporting procedures. Businesses frequently encounter the following problems:

Inaccurate Accounting Records

Missing invoices, unreconciled bank accounts and incorrectly classified expenses create discrepancies in financial statements. Regular bookkeeping and account reconciliation help prevent these issues.

Incorrect Accounting Treatments

Applying the wrong accounting standard can affect revenue, assets, liabilities and expenses. Businesses need appropriate technical guidance when handling complex transactions, acquisitions and long-term contracts.

Incomplete Financial Disclosures

Companies sometimes overlook related-party transactions, financial commitments and significant accounting estimates. Complete disclosures are essential for presenting reliable financial information.

Limited Accounting Expertise

Smaller finance teams frequently lack specialist knowledge of complex IFRS requirements. Professional advisory support gives businesses access to technical accounting expertise without maintaining a large internal specialist department.

Missing Supporting Documentation

Contracts, invoices, bank statements, loan agreements, lease documents and asset registers provide evidence for reported financial balances. Companies must maintain these records in accordance with Omani legal requirements.

Financial Reporting and Audit Responsibilities in Oman

The Commercial Companies Law establishes responsibilities covering financial statement preparation, record retention and external audits.

Important provisions include:

IFRS Sustainability Reporting Developments in Oman

Financial reporting developments in Oman also include sustainability-related disclosures.

In March 2026, the Financial Services Authority issued Decision No. Kh/7/2026, adopting IFRS S1 and IFRS S2 for listed public joint stock companies and financial institutions.

IFRS S1 addresses sustainability-related financial risks and opportunities, including governance, strategy, risk management, metrics and targets.

IFRS S2 focuses specifically on climate-related disclosures, including climate risks, business strategy and greenhouse gas emissions.

Under the FSA decision:

• Full IFRS S1 application begins on 1 January 2029.
• Full IFRS S2 application begins on 1 January 2029.
• Scope 3 greenhouse gas emissions disclosures apply from 1 January 2030.

These requirements apply to the entities identified in the FSA decision. They are separate from the general IFRS financial statement requirements under the Commercial Companies Law.

How MFN Auditing Supports IFRS Reporting Requirements in Oman

Meeting IFRS reporting requirements takes technical accounting knowledge, accurate records and consistent financial reporting procedures.

MFN Auditing supports businesses through professional accounting and financial reporting services.

IFRS Advisory and Implementation

MFN Auditing assists businesses with first-time IFRS adoption, accounting policy development, new standard implementation and technical accounting matters.

Financial Statement Preparation

Accurate financial statements require appropriate classification, measurement and disclosure. Professional preparation support helps businesses organise financial information and prepare statements for external audit.

Accounting and Bookkeeping Services

Reliable reporting begins with accurate transaction recording. Through its accounting and bookkeeping services in Oman, MFN Auditing supports businesses with financial records, account reconciliations, fixed asset management and bookkeeping.

Ongoing Accounting Support

Businesses also need support when accounting standards change or complex transactions arise. Ongoing IFRS advisory helps finance teams address technical reporting matters and maintain consistent accounting practices.

Working with MFN Auditing gives businesses access to professional accounting expertise while allowing management to focus on operational and financial priorities.

FAQs

1. Are IFRS reporting requirements mandatory for companies in Oman?

Yes. Article 209 of the Commercial Companies Law (Royal Decree 18/2019) establishes IFRS as the corporate financial reporting framework. The FSA also permits the IFRS for SMEs model when applicable regulatory conditions are satisfied.

2. Which IFRS standards are commonly used in Oman?

Commonly applied standards include IFRS 15 for revenue recognition, IFRS 16 for leases, IFRS 9 for financial instruments, IAS 12 for income taxes and IAS 16 for property and equipment.

3. Can SMEs use IFRS for SMEs in Oman?

Yes. The FSA’s Decision No. Kh/2/2025 permits its adoption where regulatory and supervisory requirements allow. Companies must explain their framework selection and its financial implications.

4. What documents are required for IFRS financial reporting?

Businesses generally need general ledgers, trial balances, bank statements, invoices, payroll records, loan agreements, lease contracts, fixed asset registers and inventory records.

5. How long must companies retain financial records in Oman?

Article 213 of the Commercial Companies Law requires companies to retain financial records for ten years from the end of the relevant financial year.

6. What is involved in IFRS implementation in Oman?

Implementation involves reviewing accounting records, conducting a gap analysis, developing accounting policies, recording necessary adjustments, updating financial systems and preparing compliant financial statements.

7. Why should companies hire IFRS advisory services in Oman?

Professional IFRS advisory helps businesses apply accounting standards correctly, address complex transactions, improve financial reporting and prepare documentation for external audits.

8. Does MFN Auditing provide IFRS implementation services?

Yes. MFN Auditing provides IFRS advisory support, including first-time adoption, accounting policy development, implementation of accounting standards and financial statement preparation.