IFRS First-Time Adoption in Egypt: When It Is Needed, How It Works

Executive summary

• Egyptian entities prepare their financial statements under the Egyptian Accounting Standards (EAS), issued by Minister of Investment Decision No. 110 of 2015 as amended, and the Egyptian Exchange listing rules require listed companies to use them (Article 45).
• Where IFRS appears in Egyptian rules: the listing rules accept statements under international standards from a foreign company listed on a foreign exchange (Article 16), and the Central Bank of Egypt has required banks to apply IFRS 9 since 2019. Neither text requires an Egyptian entity to present a full set of IFRS financial statements.
• In practice, an Egyptian entity needs IFRS figures because a foreign parent, a foreign lender or investor, or a listing abroad requires them.
• IFRS 1 requires a first-time adopter to prepare an opening IFRS statement of financial position at the "date of transition", applying every IFRS retrospectively except where IFRS 1 itself says otherwise (paragraphs 6–10).
• Nine mandatory exceptions prohibit retrospective application (Appendix B); among the optional exemptions, nineteen are in Appendix D alone (paragraph D1).
• An entity's first IFRS financial statements must reconcile equity and total comprehensive income and explain the effect of transition (paragraphs 21–25).

When an Egyptian entity needs IFRS figures

The driver is rarely Egyptian law itself; it is usually a party outside Egypt asking for figures on an IFRS basis:

• A foreign parent that consolidates under IFRS may require the Egyptian subsidiary or associate to produce a reporting package on the same basis for consolidation or equity accounting, without a complete separate set of financial statements.
• Foreign lenders or investors, where a financing or investment agreement makes IFRS-basis statements or periodic reporting a contractual condition.
• A listing abroad, where the foreign exchange or its regulator requires a framework other than EAS.

As for the Egyptian texts themselves, Article 45 of the rules for listing and delisting securities on the Egyptian Exchange (Financial Regulatory Authority Board Decision No. 11 of 2014 as amended, in the version updated to August 2026) provides that "financial statements are prepared in accordance with the Egyptian Accounting Standards and the financial statement formats in those standards, and are audited in accordance with the Egyptian Standards on Auditing". Among the conditions for listing a foreign company's shares, Article 16 provides that the statements of a company listed on a foreign exchange are prepared and audited "in accordance with Egyptian, international or American standards". Banks follow the Central Bank of Egypt's rules for the preparation and presentation of banks' financial statements, approved on 16 December 2008 and amended since, and on 17 January 2018 the Central Bank's board required banks to apply IFRS 9 from 2019.

The opening statement of financial position: the starting point

An entity whose first annual financial statements contain "an explicit and unreserved statement" of compliance with IFRS is presenting its "first IFRS financial statements" (paragraph 3). IFRS 1 then requires an opening IFRS statement of financial position at the date of transition, "the starting point for its accounting in accordance with IFRSs" (paragraph 6), using the same accounting policies throughout, applying every IFRS effective at the end of its first IFRS reporting period, not an earlier version (paragraphs 7 and 8). Where the first IFRS reporting period begins on or after 1 January 2027, that includes IFRS 18, which replaces IAS 1.

Subject to the exceptions in paragraphs 13–19 and Appendices B–E, the entity must recognise every asset and liability IFRS requires, not recognise what IFRS does not permit, reclassify items previous GAAP treated as a different type of asset, liability or equity under IFRS, and measure everything accordingly (paragraph 10). The resulting adjustments go directly to retained earnings or another component of equity at the date of transition, not through profit or loss (paragraph 11).

Mandatory exceptions and optional exemptions

IFRS 1 draws a firm line between two categories (paragraph 12): mandatory exceptions, where retrospective application is prohibited whatever the entity would prefer (Appendix B), and optional exemptions, which it may elect or ignore (Appendices C–E). The exemptions may not be applied by analogy to other items (paragraph 18).

The mandatory exceptions number nine (paragraph B1):

The main body adds one more, ahead of the appendix: an entity's IFRS estimates at the date of transition must be consistent with its previous-GAAP estimates for the same date, after adjustment for any difference in accounting policies, unless there is objective evidence they were in error (paragraph 14).

Appendix D lists nineteen optional exemptions (paragraph D1). One is deemed cost: measuring property, plant and equipment, or investment property under the cost model, at fair value at the date of transition and using that value instead of reconstructing historical cost (paragraphs D5 and D7). Another is the severe hyperinflation exemption, for which hyperinflation alone is not enough: paragraph D27 requires both a lack of a reliable general price index available to all entities and a currency that is not exchangeable into a relatively stable foreign currency. Where the functional currency was subject to severe hyperinflation before the date of transition, and the date of transition falls on or after the "functional currency normalisation date", the entity may measure all assets and liabilities held before that date at fair value on the date of transition and use that value as deemed cost (paragraphs D26–D30). Appendix C adds the business combinations exemption: an entity may elect not to restate past business combinations retrospectively (paragraph C1).

The reconciliations and explanations required

First IFRS financial statements present at least three statements of financial position, and two of each other statement: the first IFRS reporting period and one full comparative period (paragraph 21). The entity must explain how the transition affected its financial position, performance and cash flows (paragraph 23), through a reconciliation of equity at the date of transition and at the end of the latest previous-GAAP period (paragraph 24(a)), and a reconciliation of total comprehensive income for the latest period, starting from total comprehensive income under previous GAAP or, if no such total was reported, profit or loss (paragraph 24(b)) — each in enough detail for a user to understand the material adjustments (paragraph 25). An eligible subsidiary that elects IFRS 19, available for periods beginning on or after 1 January 2027 with earlier application permitted, gives IFRS 19's disclosures instead of IFRS 1 paragraphs 23–33, and both reconciliations remain (IFRS 19 paragraphs 7, 17, 24 and A1).

Egyptian statements remain compulsory alongside any IFRS figures

Minister of Investment Decision No. 110 of 2015 replaced the 2006 standards with the Egyptian Accounting Standards, then 39 standards and a framework (articles 1 and 2), and applies from 1 January 2016 to "entities whose financial year begins on or after this date" (article 3), with no carve-out for an entity that also prepares IFRS figures. A foreign group's or lender's need for IFRS numbers does not relieve an Egyptian entity of preparing its statements under those standards as currently amended (the latest amendments), or of having them audited where the law requires it (who must appoint an auditor). EAS still differ from IFRS on points that change the reported figures (the differences between EAS and IFRS). An IFRS package, where needed, is therefore an addition, not a substitute: produced by converting the Egyptian figures or by maintaining a parallel set of accounts, either way needing a documented link no less rigorous than IFRS 1's own reconciliation.

What this requires

• Identify the actual driver behind a request for IFRS figures — consolidation, financing or a foreign listing — before designing the adoption package; each carries different obligations.
• Do not assume that any Egyptian rule allows IFRS in place of EAS, outside the case of a foreign company listed on a foreign exchange (Article 16 of the listing rules).
• Identify, before starting the opening statement of financial position, any transaction that falls under a mandatory exception in Appendix B — these are not elective.
• Decide which optional exemptions in Appendices C–E will be used, and document the reason for each when preparing the opening statement of financial position.
• Prepare the equity and comprehensive income reconciliations in full detail from the first financial statements, not as an afterthought.
• Continue preparing, approving and auditing the Egyptian financial statements regardless of any parallel IFRS figures.

The firm's Audit & Assurance Department identifies the exceptions and exemptions that apply to a given entity on first-time IFRS adoption, and prepares the reconciliations required between the Egyptian and international figures.

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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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.