Oman: Corporate Governance and Accounting Standards: Empirical Study on Practice

May 22, 2018 | By admin4u | Filed in: Uncategorized.

Over the past few years, the Oman economy has undergone many reforms, resulting in more market-oriented economies. In particular, the financial impetus provided by the Sultanate of Oman indicated the beginning of a positive trend. The size of the self-industry is growing and the expectations of various stakeholders are growing, which can only be met by good corporate governance.

The importance of a good corporate governance system has increasingly been recognized by the industry as regards the competitiveness of companies, the improvement of company performance and a better relationship with all stakeholders (1). Own industries have also committed themselves to reforming the principles of governance, which the Oman companies will now need more and more complex disclosure than ever. This requires compliance with uniform and appropriate accounting standards, as standards reduce discretion, discrepancies and not only enhance transparency in information sharing with stakeholders, but also reinforce the broader role of directors in achieving company goals in the face of challenges and difficulties [19659002] Here corporate governance is a voluntary, ethical business code that is the company's moral, ethics, values, parameters, behavior and behavior and management. Corporate Responsibility starts with a company leader who is the mind and soul of a company.

The board expects to work as a conscience spirit of corporate vision and mission and design appropriate types of systems for organizational efficiency and stakeholders. Thus, Corporate Governance is a system of accountability aimed primarily at shareholders, while maximizing shareholders' equity (2), where discussion on disclosure / transparency on corporate governance is ultimately in compliance with the relevant accounting standards and practices, as accounting standards have a high level of trust gives corporate leadership and makes publishing more effective and ensures good corporate governance to promote a healthy investment environment.

Thus, studying accounting standards is important and proper corporate governance is the right issue in the current environment as standards are considered to be a technical response to better financial reporting and reporting; or reflect changing society's expectations of corporate behavior and social and political tracking and control of a vehicle for the business (3).


The old ways of selective and conservative reporting provide more space for transparent and voluntary disclosure, in line with changing times. There is no alternative for corporate organizations to adopt new accountability standards where accountability is largely due to disclosure of information, transparency, and the company's business intelligence (4), ie a simple understandable and comparable form, are clearly the basis of accountability , which can only be ensured if the companies apply a uniform accounting policy and provide appropriate information on the accounting standards applied. Thus, accounting standards provide comprehensive disclosure of corporate accountability, which is a primary issue and a prerequisite for good corporate governance.

Examining accounting standards practices and self-industry trades can help you understand the existing practice of accounting standards that help to develop effective standard practices to ensure a sound corporate governance system that leads to a healthy investment environment

In this context, they apply accounting standards and their own practice in Oman with the aim of strengthening accounting standards and improving their good corporate governance practices. The study's data comes from the ten, different types of companies from the largest companies, selected from annual financial reporting instruments (from 2001 to -02). The sample consisted of 6 private and 4 state companies. A simple percentage method is for data analysis. The authenticity of the data is verified by the opinions of the management who are familiar with corporate affairs and corporate governance. They will also examine companies' perception of the relevance of good accounting standards in the Oman context.


In all countries, companies' awareness and competitiveness are gaining strength if they understand each other and compare their performance for which simple, comprehensible and comparable disclosure is an important tool. The main objective of disclosure would be met and improving disclosure to an appropriate corporate governance system would be improved if disclosure is made on the basis of consistent and consistent accounting standards. Thus, the development and practice of unified accounting standards has become an essential element of corporate governance and the various bodies have contributed to strengthening standards in order to make corporate governance more effective in changing corporate environments. Corporate management has also been under pressure from the reform of accounting practices and transparency by alerting creditors, regulatory agencies, financial analysts and, above all, the board of directors who recognize that the quality of information determines their effectiveness

in Oman, although the financial statements have been prepared in accordance with International Accounting Standards issued by the International Accounting Standards Board (IASC), the interpretations issued by the IASC Standing Interpretation Committee are subject to the disclosure requirements set out in the Commercial Company Law of the Sultanate Sultanate and the disclosure rules of the Overseas Patriarchate Authority, is an inadequate and negative phenomenon for a country that needs to be further strengthened because it does not hope that it is in contact with insufficient financial disclosure sbe of the GDR market are as transparent activities of company governed by the relevant accounting standards, securities are valued more accurately (5).

International Accounting Standards Used in the Oman Industry Presentation of Financial Statements (IAS 1); Stocks (IAS 2); Cash Flow Statements (IAS 7); Net Profit or Loss for the Period (IAS 8); Fundamental errors and changes in accounting policies (IAS 9); Events after the balance sheet date (IAS 10); Construction contracts (IAS 11); Income tax (IAS 12); Segment Reporting (IAS 14); Effects of price changes (IAS 15); Property, plant and equipment (IAS 16); Leases (IAS 17); Revenue (IAS 18); Employment benefits (IAS 19); Accounting for the government. Aid and governance. Assistance (IAS 20); Effects of exchange rate changes (IAS 21); Business Combinations (IAS 22); Borrowing Costs (IAS 23); Related Party Disclosures (IAS 24); Retirement benefits (IAS 26); Consolidated Financial Statements (IAS 27); Investments in Associates (IAS 28), Hyperinflationary Holdings (IAS 29); Banks and similar financial institutions (IAS 30); Interest in joint ventures (IAS 31); Financial Instruments: Disclosure and Presentation (IAS 32); Earnings per share (IAS 33); Interim Financial Reporting (IAS 34); Discontinuing operations (IAS 35); Impairment of Assets (IAS 36); Provisions, contingent liabilities and assets (IAS 37); Intangible assets (IAS 38); Financial Instruments: Recognition and Measurement (IAS 39); Investment Property (IAS 40); Agriculture (IAS 41).

Although the self-industry follows all international accounting standards, in practice, some are not free from criticism because of certain weaknesses. The practices and shortcomings of Oman standards are discussed below in order to strengthen them to ensure good corporate governance.


Primary and secondary data from selected companies are carefully looking at compliance with accounting standards and business practices issues. Some important findings are as follows:

(i) Comments on the relevance of accounting standards for corporate governance: Except for a sample of private undertakings that have not issued an opinion, all others (90% of the sample)

(ii) Practice of accounting policies published in the annual accounts: Most sample producers (80%) reported twenty-twenty policies, the remainder being equally divided between twenty and twenty years. more than twenty-five standards were announced by selected companies. All selected publicly traded companies have executed 20-25 accounting standards.

(iii) Inventory Valuation Practice: The sample producers introduced the asset value or net realizable value or a lower value of the moving average valuation method [19659002] (iv) Practice of cash flow statement: All selected companies presented cash flow and Changes in the equity method

(v) Corporate Depreciation Practice: The study showed that the majority of sample producers (90% followed straight-line methods for calculating depreciation and the remaining depreciation method followed.) Further investigation found that each sample state- straight linear depreciation method

(vi) Practice of construction contracts: The sample consists of a construction company that follows the percentage of the completion method

vii. Research and Development: None of the companies selected have presented research and development expenditure

viii. Practice of Other Standards: The study revealed that accounting practices, changes in prices, hyperinflationary economics, financial statements of banks and similar financial institutions and agriculture related to fundamental errors and changes had not been reported in one of the selected companies as companies do not deal with such activities.

From the analysis of exercises and general discussions, some accounting standards in the Oman context are briefly identified and presented here.


(i) The publication of accounting policies is followed by a majority of sample producers as it is compulsory. Items in accounting policies or records are more or less the same as all the issues selected in the study but the handling of certain items did not resemble the other issues.

The disclosure standard requirement is only the material facts, the material or irrelevant decision of the organization, where the impact of personal judgment is expected in the absence of specific guidance. Therefore, the existence of a standard is doubtful

ii. Alternative accounting is permitted in some accounting standards, such as stock valuation and depreciation. This type of flexibility has difficulty in assessing the quality and reliability of an enterprise's financial statements and tracking different methods at different companies or at different times is detrimental to intra-unit, intra-industry or within-range comparisons. Due to lack of comparability, financial information is less useful and disturbs the investor audience

iii) For construction contracts, the standard requires the completed contractual method or completion rate iv. The hybrid accounting method, ie cash-based income accounting and accrual-based (commercial-based) expenses that companies have followed, conveniently allows them to manipulate their meaning. V) The process of defining standards is closed and narrow and implementation is defective, various practices and imperfect disclosure, which hinders the primary purpose of good accounting standards in achieving good corporate governance.

vi. the adoption of IAS in toto without examining their relevance in the context of their own industrial environment, lack of emphasis on domestic problems and indigosity

The following suggestions are made to resolve the above issues and to ensure good corporate governance through discussions with companies


(i) In order to improve quality reporting, the most important suggestion for strengthening accounting standards is to focus on local circumstances and to improve the relevance of accounting standards to better comply with standards or to meet existing accounting standards. (ii) The Oman Capital Markets Authority should consult with other professionals and regulatory bodies to develop a mechanism to limits the scope of alternative methods available in the accounting standard. Thus, the application of standard accounting standards would increase the quality and comparability dimension of financial statements and reports

(iii) to bring about consistency between applicable legislation such as company law, income tax law, banking regulations, based on the various items of the financial statements, would give a true and fair view of the business.

(iv) Comprehensive and indigenous standards, such as price changes, inflation economies, segment accounting, and accounting for joint ventures. In summary, although the entire industrial community followed international accounting standards and accepted disclosure practices in order to to ensure a true and fair view of economic activities, much more needs to be done to promote good tribes in governance and a healthy investment environment. The other Central and Eastern European countries that use liberalization policies and want to increase international capital market activities due to globalization need to learn that reducing the approaches to individual accounting standards, formulating comprehensive and indigenous norms to reach mandatory targets, it should be important, otherwise it will be extremely difficult for Oman investors to trust in corporate governance

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* The article was published in the Accounting, Trade and Finance: The Islamic Perspective International Conference, Brisbane, Australia, June 15-17, 2004. He records it.

first REFERENCES: Tiwary, Ojha, Arun Kumar, "Corporate governance in India: What does it mean and what does it require?", The Indian Journal of Commerce, New Delhi, October 1998, p.154.

2nd Chandratre, KR, "The role of the board in the emerging dimension of corporate governance and imminent changes in corporate law, Chartered's Secretary, Chartered Secretary of the Institute India, New Delhi, May 97, 505.

3. Michael Bromwich and Anthony G. Hopwood, ed., Corporate Accounting Standards Setting, International Perspective, Pitman Books Ltd., London, 1883, p. 27, Lele RK, Jawahar Lal, "Accounting Theory," Himalaya Publishing, New Delhi, p.

4. Sir Adrian Cadbury, "Development of Corporate Governance," Secretary of the Company, 5. Cadbury's Report on Financial Aspects of Corporate Governance, Secretary of the Enterprise, India Office Secretariat, New Delhi, New Delhi, 1997 "The abolition of accounting standards against corporate features: a study of the Indian corporate sector", The Indian Journal of Commerce, May 1997, 977. 497.

May 97, 573.

6. Verma, Garg, Singh, , New Delhi, Oct.-Dec, 1998, p.131

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Source by Kanukuntla Shankaraiah

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