posted on January 19, 2022

On 28 March 2019, the Egyptian Minister of Investment and International Cooperation issued Decree No. 60 of 2015 which includes new standards and amending some existing provisions of the Egyptian Accounting Standards. The amendments to the EASs have been published in the official gazette on 7 April 2019. These changes are mainly represented in:

8 Standards have been replaced: 10 Standards have been amended: 3 Standards have been removed:
EAS (1): Presentation of Financial Statements

EAS (4): Statement of Cash Flows

EAS (25): Financial Instruments “Presentation”

EAS (26): Financial Instruments “Recognition and Measurement”

EAS (34): Investment Property

EAS (38): Employee Benefits

EAS (40): Financial Instruments “Disclosures”

EAS (42): Consolidated Financial Statements


EAS (15): Related Parties Disclosures

EAS (17): Separate Financial Statements

EAS (18): Investments in associates

EAS (22): Earnings per share

EAS (24): Income taxes

EAS (29): Business Combination

EAS (30): Interim Financial Statements

EAS (31): Impairment of assets

EAS (32): Non-current assets held for sale and discontinued operations

EAS (44): Disclosure of interest in other entities

EAS (8) – Construction Contracts

EAS (11) – Revenue

EAS (20) – Finance Leases


3 Standards have been added:
EAS (47) – Financial Instruments

EAS (48) – Revenue from Contracts with Customers

EAS (49) – Leases


Hereunder we provide an overview over the three new standards which should be adopted for the financial periods commencing on or after 1 January 2021.

EAS No. (47) – Financial instruments:

This standard sets out rules for recognising and measuring assets, financial liabilities and certain contracts for the purchase or sale of non-financial items. It replaces EAS 26 “Financial Instruments: Recognition and Measurement”, which is applied until 31 December 2020. The new standard brings together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

(i) Classification and measurement: Under EAS 47, debt instruments are subsequently measured at fair value through profit or loss, amortised cost, or fair value through OCI.

The classification is based on two criteria:

1.      The company’s business model for managing the assets; and

2.      Whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

(ii) Impairment EAS 47 requires a company to record expected credit losses on all of its debt securities, loans and receivables, either on a 12-month or lifetime basis. The adoption of EAS 47 will fundamentally change the reporting entity’s accounting for impairment losses for financial assets by replacing EAS 26’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. EAS 47 requires the reporting entity to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets.
(iii) Hedge accounting Under EAS 26, all gains and losses arising from cash flow hedging relationships were eligible to be subsequently reclassified to profit or loss. However, under EAS 47, gains and losses arising on cash flow hedges of forecast purchases of non-financial assets need to be incorporated into the initial carrying amounts of the non-financial assets. This change only applies prospectively from the date of initial application of EAS 47 and has no impact on the presentation of comparative figures.


Mandatory adoption date:

Standard No. (47) applies to periods beginning on or after January 1, 2021, and early application is permitted, provided that Egyptian Accounting Standards No. (1), (25), (26) and (40) modifications 2019 are applied together at the same dates.

 EAS No. (48) – Revenue from contracts with customers:

EAS 48 establishes a five-step model to account for revenue arising from contracts with customers. Under EAS 48, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The five-steps model can be summarized as follows:

Step (1)

Step (2)

Step (3)

Step (4)

Step (5)

Identify the Contract with Customer

Identify the Performance Obligations (PO)

Determine the Transaction Price (TP)

Allocate (TP) To Each (PO)

Recognise Revenue as / when Each (PO) is Satisfied

 The new revenue standard will supersede all current revenue recognition requirements under EAS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2021. Early adoption is permitted.

EAS No. (49) – Leases:

EAS 49 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model, instead of the requirements of the current Egyptian Accounting Standards which accounts for lease agreements as executory contracts with a straight-line charge to the statement of profit or loss.

The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).

Effect on the statement of financial position

Effect on the statement of profit or loss & OCI

At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.



Remeasurement of lease liability:

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Transition of EAS 49 – Leases:

EAS No. (49) applies to financial periods beginning on or after January 2021 “except for leasing contracts subject to the Finance Leasing Law No. 95 of 1995 and law number 176 of 2018 it applies from the beginning of the annual reporting period in which Law 95 of 95 was cancelled”. Early application is permitted if EAS No. (48) “Revenue from contracts with customers” is applied at the same time.


Contributed by

Ziad Hamdy, CPA, CMA, ESAA “Audit and Advisory Partner”

Ziad is the audit services partner at Nearshore Middle East. He also heads the advisory services team in addition to the IFRS adoption team. He has extensive experience in dealing with audit and advisory clients in various sectors. His client base covers all types and sizes of companies. He has also conducted several financial due diligence engagements in Egypt and the Middle East, and he has helped many clients to convert to (IFRS).


Nearshore Middle East is an Egyptian Audit, Tax, and Advisory firm, providing external audit and taxation services ranging from litigation support and corporate finance, to VAT planning and project management.

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