SUMMARY

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Introduction

The International Financial Reporting Standards (IFRS) is an indicator of globalization owing to the consistency presented by the reports prepared under these standards for multinational companies and those in developed countries. The financial health of global money markets as well as emerging economies and developing nations in regard to wealth creation is key to the world (Boolaky, Omoteso, Ibrahim, & Adelopo, 2018). Under-industrialized countries strive to share in this prosperity by adopting globalized business exercises and a set of worldwide accounting standards (Mardini, Crawford, & Power, 2012). Rising countries have also moved toward adopting the IFRS by recognizing the need to participate in openings offered by globalization. However, the relevance of these standards to the nations mentioned above is questionable. The Middle East is one of the regions with emerging economies that are embracing the IFRS in their accounting systems. The countries in this region enjoy greater resources when compared with developing nations, which implies different financial limitations (Boolaky et al., 2018). Nevertheless, they encounter the same challenges in applying IFRS in regard to changing the culture and creating methods of control and responsibility. Generally, the implementation of IFRS in the Middle East is challenging as it is in developing countries.

United Arab Emirates (UAE) have supported globalization. The adoption of IFRS is part of the process for the nations to enjoy its benefits, for instance, through foreign direct investment (FDI) enticement. The country mentioned above faced various difficulties in implementing this approach of financial reporting, including the establishment of a legal and supervisory framework to weaken a culture of privacy and deception that is common in evolving economies.

The establishments of multinational companies have spread across different regions, which is fostered by the developed countries and their purposeful politics and strategies meant to increase prosperity and economic positions. If UAE aim to engage in the resources enjoyed by industrialized nations, then they must accept cultural imperialism, a logic that certain states have tried to prevent, along with other consequences of globalization. 

Conclusion

The challenges facing the adoption of IFRS in the Middle East mainly relate to cultural, regulatory, environmental, and legal aspects. The Sharia law is among the most important determinants of financial reporting methods and requirements in this region. Therefore, it would be adequate for international accounting standards to consider the diversity in the factors as mentioned above and accord considerable attention to Sharia. The collaboration between standard setters, academicians, and other relevant parties to the development and application of the international standards to reporting Islamic financial transactions can limit elements that hinder the success of IFRS in the Middle East.

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