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Global Tariff and Geo-Political Shifts_ Implications for Oman's Audit Profession

Global Tariff and Geo-Political Shifts

Implications for Oman's Audit Profession

The world has ushered in a new era after America has introduced a new tariff regime and significant geo-political events have recently happened that will change the global security and economic outlook. These changes have deep strategic and economic implications, and the Auditors will need to review their risk assessment procedures and audit approach.

Major Developments

  • Oman's Vision 2040 plans FDI in sectors like renewable energy, logistics, manufacturing, tourism, and technology. The global flow of capital and investments shall have to be reworked for tapping the new opportunities.
  • Although Oman has a Free Trade Agreement (FTA) with the U.S. since 2009, other countries such as China, Canada, and the UK will revise their international tariffs, which will change global trade dynamics and supply chains. Omani businesses will need to explore new markets from new regions to remain competitive.
  • Oman is positioning itself as a logistics hub through ports like Sohar and Duqm. With global shifts in trade flows and shipping routes, more challenges as well as opportunities may arise, potentially enhancing Oman's role as a transit hub.

Challenges

  • Changes in Trade and Customs Compliance: All the major economies will revise their trade policies, custom duties/exemptions, transfer pricing regulations, foreign ownership laws for priority sectors, etc. Auditors will need to update their knowledge of regulatory requirements so that non-compliance is identifiable during audits.
  • Stricter Taxation and Financial Reporting Standards: New tax rules including the OECD's Global Minimum Tax (Pillar Two) and ESR requirements will require vigilance on cross-border transactions and offshore entities.
  • Market Volatility in Key Sectors: Oil and gas prices will fluctuate. Auditors must assess if revenue forecasts and asset valuations are still valid. Logistics policy reviews may also affect inventory valuation and revenue recognition.
  • Increased Corporate Defaults and Bad Debts: Slower growth and high interest rates will affect loan repayment capacity. Auditors must assess liquidity and expected credit losses (ECLs).
  • Fraud and Financial Misrepresentation: Economic stress may lead to manipulation of financial statements. Auditors must be alert to revenue recognition issues, hidden liabilities, and misclassifications.
  • Key Talent-Related Issues: Oman is focused on upskilling its local workforce. Audit firms must invest in training and development for nationals.
  • Continuous Professional Education and Development: With evolving financial regulations, ongoing CPE in IFRS, tax rules, and compliance is essential.
  • Availability of Professional Workforce: Global immigration and visa changes may reduce access to skilled labor. Retention and local training become vital.

Technology Driven Tools and Techniques

AI-powered auditing tools, blockchain-based financial reporting, and automation will redefine audit work. Firms must invest in data analytics, digital audit skills, and regulatory technology.

Practical Considerations for Auditors

  • Update their knowledge about new compliance requirements.
  • Invest in advisory services (e.g., compliance, risk mitigation).
  • Coordinate with global regulators for multi-jurisdiction clients.
  • Use forensic auditing to identify fraud risks.
  • Adopt AI-driven risk assessment tools to detect anomalies.
  • Scrutinize financial forecasts in sectors hit by trade disruptions.
  • Plan for Omanization targets and specialized talent requirements.
  • Bridge skill gaps with ongoing training programs.
  • Manage increased audit workload due to compliance changes.
  • Upskill staff in digital finance, sustainability, and tax compliance.
  • Collaborate with international audit firms for technical expertise.

Conclusion

In light of global changes affecting Oman, audit firms must proactively adapt and enhance their skills to ensure financial transparency and maintain confidence in the auditing profession.