IFRS 9 for Corporates & Non-Banking Entities in Oman

As Oman pursues its Vision 2040 goals of economic diversification and global integration, the adoption of IFRS 9 Financial Instruments has become a critical milestone—not just for the banking sector, but for every corporate and non-banking entity operating in the Sultanate.

While many initially viewed IFRS 9 as a “banking standard,” its reach is far wider. For Omani corporates, it transforms how trade receivables, intercompany loans, and investments are reported, bringing a new level of transparency and risk awareness to the balance sheet.

The Three Pillars of IFRS 9 for Corporates

For a non-banking entity in Oman, IFRS 9 is built on three fundamental shifts in accounting logic:

1. Classification and Measurement

Assets are no longer just “long-term” or “short-term.” They are now classified based on two specific tests:

The Business Model Test:

Is the asset held to collect cash flows (like a standard invoice) or to sell it for a gain?

The SPPI Test:

Do the cash flows consist “Solely of Payments of Principal and Interest”?

2. The Expected Credit Loss (ECL) Model

This is the most significant change. Under the old standard (IAS 39), companies only recorded a loss when a customer actually defaulted (the “incurred loss” model).

Under IFRS 9, you must look forward. Even for a brand-new invoice, a corporate must estimate the “expected” loss over the next 12 months or the lifetime of the asset. For Omani businesses, this means incorporating local macroeconomic factors—such as oil price fluctuations or GDP growth—into their bad debt provisions.

3. Hedge Accounting

IFRS 9 offers a more “business-friendly” approach to hedging. For Omani entities dealing with foreign exchange risks or commodity price volatility (common in the oil, gas, and manufacturing sectors), the new rules allow accounting to better reflect the company’s actual risk management strategies.

Why This Matters in Oman Today

Attracting Investment:

As Oman seeks more Foreign Direct Investment (FDI), having financial statements that speak the “global language” of IFRS is a prerequisite for international investors.

Regulatory Alignment:

The Capital Market Authority (CMA) and other regulatory bodies in Oman are increasingly vigilant about high-quality financial reporting.

Better Decision Making:

By using forward-looking ECL models, Omani CFOs get an “early warning system” for credit risks in their supply chains, rather than reacting after a loss has already occurred.

Key Challenges for Omani Entities

Data Availability:

Many non-banking firms struggle to find the historical data needed to build robust ECL models.

Macroeconomic Integration:

Translating Omani economic forecasts into a “credit risk percentage” requires specialized financial expertise.

System Upgrades:

Older ERP and accounting systems may not be equipped to handle the automated calculations required for ongoing IFRS 9 compliance.

Conclusion:

IFRS 9 is more than a compliance exercise; it is a strategic tool. For corporates and non-banking entities in Oman, mastering this standard is essential to maintaining trust with lenders, regulators, and shareholders.

Fineit provides specialized IFRS 9 advisory and implementation services in Oman, helping corporates and non-banking entities build compliant, audit-ready ECL models and disclosures aligned with local regulations.

Partner with Fineit to simplify IFRS 9 compliance and strengthen financial confidence.