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EFSA Meets the Egyptian Society of Accountants and Auditors (ESAA) to Discuss the impact of Exchange Rate Liberalization

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• Minister of Public Business Sector and EFSA’s Chairman participated in the meeting of the Egyptian Society of Accountants and Auditors (ESAA)
• The Egyptian Accounting Standards Annex handles the impact of changes in foreign currency exchange rates or the extraordinary profits or losses resulting from it
• Sherif Samy: I am looking forward to the day when EFSA will not review the fair value studies
• Sherif Samy: The issuance of the Egyptian valuation standards has made a quantum leap in the credibility of valuations

Sherif Samy – EFSA’s Chairman stressed that auditors are important partners in achieving the integrity of the financial disclosures of companies subjected to EFSA’s supervision. He noted that he is keen to consult them on everything related to the profession or the applied accounting rules. He pointed out that the Supreme Committee for Accounting and auditing standards under his chairmanship has discussed at length the recent amendments to the Egyptian Accounting Standards which are related to the impact of changes in foreign currency exchange rates, and until the issuance of Accounting Standard annex no. 13 which is applied once this year.

The meeting of the Egyptian Society of Accountants and Auditors (ESAA) was headed by Hazem Hassan. It was attended by Dr.  Ashraf El Sharkawy, Minister of Public Business Sector and a large number of auditors and a representative of the Central Auditing Organization and experts from EFSA.   In his speech in the meeting, EFSA’s Chairman emphasized that the issuance of the first Egyptian valuation standards and the Egyptian Real Estate Appraisal Standards which is essential to the work of the auditors and all dealers in the financial markets, represent a quantum leap in credibility and objectivity.

Sherif Samy noted that he is waiting that day where EFSA will not review the fair value studies. He added that this is applied in most of the capital markets in the world, that is after promoting the application of valuation standards.

In his speech, Ashraf El Sharkawy – Minister of Public Business Sector revealed that he had asked companies under the Ministry’s supervision-   immediately after Liberalization of the Exchange Rate- to analysis the impact of these changes on their work. He explained that some companies have achieved positive results from the liberalization of the exchange rate decision. Whereas, some companies have been adversely affected and noted that these impacts were temporary and not related to the activity. Also, Dr.  Ashraf Sharkawy recommended that the Egyptian accounting standards must allow the re-evaluation of real estate assets and not be restricted on the historical cost basis that is besides setting strict controls to ensure its objectivity.

Hazem Hassan – Chairman of the Egyptian Society of Accountants and Auditors (ESAA) noted that the added annex which was issued by the Minister of Investment decision no. (16) of 2017 aims to develop a special optional accounting treatments to deal with the impacts of the liberalization of foreign exchange on the financial statements of the entities which use the Egyptian pound. He pointed out that as a result of this extraordinary economic action, lot of entities have gained profits and  others  faced losses as a result of  these exceptional changes in the currency due to the presence of assets balances and liabilities of monetary nature that dramatically affected these entities. Also, liberalization of the exchange rate has impacts – either directly or indirectly- where the historical cost of certain assets completely differs from its replacement costs.

The meeting discussed various aspects related to the application of the new amendments to the accounting standards and all questions from the audience were answered.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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