Adapted and expanded from Dr. Ahmad Helwani’s original LinkedIn publication. This website edition includes current technical updates and practical examples.

Start with the reporting requirement

A Dubai business may prepare one set of financial statements for local stakeholders and a separate reporting pack for an overseas parent. Before comparing the numbers, establish which accounting framework each report follows. An accounting profit figure is meaningful only when the policies, reporting period and consolidation scope are understood.

The term GAAP means generally accepted accounting principles; it does not refer exclusively to one country's rules. This article compares US GAAP with IFRS Accounting Standards. It is a practical starting point for identifying adjustments, rather than a complete conversion manual.

Use the correct source for each framework

The FASB Accounting Standards Codification is the authoritative source of nongovernmental US GAAP, with SEC requirements also relevant to SEC registrants. IFRS Accounting Standards are developed by the International Accounting Standards Board. A broad description such as rules-based versus principles-based is too limited to settle a particular transaction.

For a UAE subsidiary, agree the reporting basis with the parent, auditor and relevant stakeholders before designing the accounts. A parent company's reporting instructions should identify the required framework, materiality, reporting currency and policies. A spreadsheet heading saying GAAP is not sufficiently precise.

Inventory: investigate the costing policy

Under IAS 2, ordinarily interchangeable inventory uses FIFO or weighted-average costing. Specific identification applies to inventory that is not ordinarily interchangeable. US GAAP also accommodates LIFO, so a group using that method cannot assume its inventory figure carries over unchanged into IFRS reporting.

For a trading business, retain the item-level movement report, purchase costs, stock-count results and the chosen costing policy. Review slow-moving and damaged goods as well as quantities. A framework comparison should reconcile both cost and valuation adjustments; matching the physical stock count alone does not establish that the reported inventory values are equivalent.

Leases: both frameworks can create balance-sheet balances

It is outdated to say that US GAAP generally keeps operating leases off the balance sheet. Topic 842 requires recognition of right-of-use assets and lease liabilities for both finance and operating leases, subject to the applicable requirements and exceptions. IFRS 16 generally uses a single lessee model, with exemptions including qualifying short-term and low-value leases.

Classification, expense presentation and cash-flow presentation can still differ. Collect signed agreements, payment schedules, renewal options and amendments. A rented clinic, restaurant or office may need a lease assessment even when management has historically recorded only the monthly rent payment.

Development expenditure needs evidence

IAS 38 distinguishes research expenditure from development expenditure. Research costs are expensed; development costs are recognised as an intangible asset only when the specified criteria are satisfied. A management decision to call spending an investment does not establish those criteria.

US GAAP has its own requirements, including specialised guidance for software. Avoid applying a blanket rule to every development project. Maintain project descriptions, approvals, cost records and the evidence supporting the accounting assessment.

Build a reconciliation, not two disconnected ledgers

Illustrative example: a UAE distributor sends a reporting pack to a US parent. Its finance team should start from the reconciled local trial balance, identify the relevant policy differences and record clearly labelled reporting adjustments. Each adjustment should show its calculation, supporting documents, reviewer and effect on opening balances and the current period.

Keep a policy register covering inventory, leases and material development projects. Agree recurring entries with the group finance team and revisit them when contracts or standards change. This produces a clearer reporting trail than altering operational records simply to make two reporting packs display the same profit. PLS can help organise the underlying records and reporting schedules for that review.

Sources and further reading

Reviewed and expanded on 2 November 2026. Examples are illustrative. The treatment of a particular business depends on its facts and the rules applicable to the relevant period.