In accordance with Companies Law No. 1 of 2016 and its executive regulations as amended, all companies in the State of Kuwait are required to apply the International Financial Reporting Standards (IFRS) when preparing their audited financial statements. These standards require companies to evaluate investments designated as financial instruments at fair value through profits or Losses or through other comprehensive income for recognition in the financial statements.
Why do IFRSs require investments to be measured at fair value?
Within the visionary framework set by the International Financial Reporting Standards Committee, that is all the values reported in the financial statements should appear at the fair value of all assets and liabilities, enabling stakeholders to determine the fair value of each component of the financial statements and to make sound investment decisions.
What are the governing references of IFRS that mandate investment evaluation?
IFRS 9 “Financial Instruments” requires investments to be evaluated and their fair value measured.
What is the difference between recognizing the fair value of an investment through profit or loss or through other comprehensive income?
The company’s management strategy for managing the investment determines the classification under which these investments should appear in the financial statements, as short and medium-term investments are classified at their fair value through profit or loss, while long-term investments are classified at their fair value through other comprehensive income.
Do IFRSs mandate the appointment of an independent investment advisor?
No, but engaging an independent investment advisor provides companies with the following benefits:
- Providing a technical opinion independent of the company’s management thus, supporting the fair value of these investments
- Providing best practices in the field of investment valuation
- Availability of local, regional and high-quality databases on a wide scale covering all business sectors
- Availability of expert advisors in securities and investment activities
- Availability of financial analysts experienced in historical financial analysis and preparation of future estimates
Why does Baker Tilly provide this service?
Baker Tilly is distinguished by specialist professional experience and offers the following characteristics carrying added values to our clients as follows:
- A global consulting firm operating in the State of Kuwait;
- Baker Tilly has a license as an investment advisor from the Capital Markets Authority;
- Local experience under an umbrella of a global network;
- Professional team with in-depth experience in providing investment consultancy services;
- Professional team with in-depth experience in IFRS applications
- Bilingual team.