Complete Financial Statements in Egypt: Components and Presentation

Executive summary

• Egyptian Accounting Standard 1, "Presentation of Financial Statements" (Amended 2019, as amended by Prime Minister's Decree 883 of 2023), defines the complete set: five statements, the notes and comparative information, with equal prominence (paragraphs 10 and 11).
• The income statement is a separate statement placed before the statement of comprehensive income; IFRS allows the two to be combined (paragraphs 12 and 81A).
• Statements may not be described as complying with the Egyptian standards unless they meet all their requirements (paragraph 16).
• The going concern assessment covers at least twelve months from the end of the financial period (paragraph 26).
• Comparatives mean at least two of each statement, plus a third statement of financial position after a retrospective policy change, restatement or reclassification with a material effect (paragraphs 38A and 40A).
• In a joint stock company the ordinary general assembly meets within three months of the financial year-end and approves the statements (Law 159 of 1981, articles 61, 63 and 64).

The complete set of financial statements

The standard sets out the basis for presenting general-purpose financial statements so that they can be compared with the entity's own statements for earlier periods and with those of other entities (paragraph 1). Under paragraph 10, the complete set comprises:

Each statement is presented with equal prominence (paragraph 11), and profit or loss is presented in a separate income statement immediately before the statement of comprehensive income (paragraphs 12 and 81A). This separation has been mandatory in Egypt since the 2015 standards, and the preface to the standards still lists the single-statement option among the international options excluded, whereas IAS 1 permits a single statement or two statements, as does IFRS 18, which replaces IAS 1 for annual periods beginning on or after 1 January 2027.

The text in force is the Amended 2019 standard (Minister of Investment and International Cooperation Decree 69 of 2019) as amended by Prime Minister's Decree 883 of 2023, which, alongside the introduction of the revaluation model, added changes in revaluation surplus to the items of other comprehensive income in paragraph 7 and provided in paragraph 96 that they are not reclassified to profit or loss, although they may be transferred to retained earnings. The standard has not been amended since, as at 29 September 2026.

Fair presentation and compliance with the standards

"Financial statements shall fairly present the financial position, financial performance and cash flows of an entity," and fair presentation is presumed to result from applying the Egyptian standards, with additional disclosure where necessary (paragraph 15). An entity makes an explicit and unreserved statement of compliance in the notes, and "an entity shall not describe financial statements as complying with the Egyptian Accounting Standards unless they comply with all the requirements of the Egyptian Accounting Standards" (paragraph 16). A departure from a specific requirement is possible only in rare circumstances where compliance would be so misleading as to conflict with the objective of financial statements, and only if the regulatory framework does not prohibit it; the departure and its financial effect on each item must be disclosed (paragraphs 19 and 20).

Going concern and the accrual basis

Management assesses the entity's ability to continue as a going concern, and the statements are prepared on that basis unless management intends to liquidate the entity or cease trading, or has no realistic alternative but to do so; material uncertainties that may cast significant doubt on that ability are disclosed (paragraph 25). The assessment covers "the foreseeable future, which is a period of at least, but not limited to, twelve months from the end of the financial period" (paragraph 26). The statements are prepared on the accrual basis, except for cash flow information (paragraph 27).

Comparative information and consistency of presentation

An entity presents the preceding period's figures for every amount recognised in the current period's statements (paragraph 38); the minimum is two of each of the five statements, with their notes (paragraph 38A). Where a retrospective change in accounting policy, a retrospective restatement or a reclassification has a material effect on the statement of financial position at the beginning of the preceding period, a third statement of financial position is presented as at that date (paragraph 40A). Presentation and classification are kept from one period to the next unless a significant change in the nature of operations, or a review of the statements, shows that another presentation would be more appropriate, or an Egyptian standard requires the change (paragraph 45).

Notes to the financial statements

The notes present the basis of preparation and the accounting policies, the information the standards require that is not presented elsewhere, and any further information needed to understand the statements (paragraph 112), in a systematic order as far as practicable, with each line item cross-referenced to its note (paragraph 113). The standard separates management's judgements in applying the accounting policies, other than those involving estimates, that have the most significant effect on the amounts recognised (paragraph 122), from the assumptions about the future and other major sources of estimation uncertainty at the end of the period that carry a significant risk of material adjustments to carrying amounts within the next financial year (paragraph 125). An entity also discloses its capital management objectives, policies and processes (paragraphs 134 and 135), dividends proposed or declared before the statements were authorised for issue (paragraph 137), and its domicile, legal form, country of incorporation, the nature of its operations and the name of its parent (paragraph 138).

Who prepares the financial statements and who approves them

In a joint stock company, the board of directors prepares, for each financial year, the financial statements and a report on the company's activities and financial position, in time for the general assembly to be held within three months at most of the year-end (article 64 of Companies Law 159 of 1981). Article 187 of the Executive Regulations assigns this to the board, or the partner or managing partners as the case may be, and article 189, in the consolidated text published by the General Authority for Investment and Free Zones (GAFI), requires the statements and the board's report to be prepared within two months at most of the year-end and placed at the auditor's disposal. The form of the statements may not change from one year to the next except, exceptionally, with the change and its reasons explained (article 190); Minister of Investment and International Cooperation Decree 16 of 2018 replaced "balance sheet" and "profit and loss account" with "financial statements" throughout the regulations.

Article 61 of the law, as amended by Law 4 of 2018, provides that "the assembly must be held at least once a year within the three months following the end of the company's financial year." The ordinary general assembly considers the auditor's report and the board's report and approves the financial statements (article 63 of the law; article 216 of the regulations). Once they are approved, the company delivers a copy to GAFI together with an annual data form covering, in particular, its workforce, investments and updated core company information (article 189 bis, added by Decree 16 of 2018).

What this requires

• Preparing the complete set as one whole, not merely a balance sheet and a profit and loss account.
• Keeping the income statement separate from the statement of comprehensive income, and presenting changes in revaluation surplus in other comprehensive income where the revaluation model is used.
• Checking compliance with every requirement of the standards before stating compliance in the notes.
• Documenting the going concern assessment for at least twelve months from the end of the financial period.
• Preparing comparatives, and a third statement of financial position after a retrospective restatement or reclassification with a material effect.
• Keeping judgements and sources of estimation uncertainty separate in the notes.
• In a joint stock company: placing the statements and the board's report at the auditor's disposal within two months, holding the ordinary general assembly within three months of the year-end, then delivering a copy of the approved statements to GAFI.

The firm's Accounting & Bookkeeping Department reviews the completeness of a company's financial statements and their compliance with Egyptian Accounting Standard 1 before they go to the auditor and then to the general assembly for approval.

Mahmoud Nassef — Chartered Accountant (Egyptian Register), Founder Partner

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

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