At a time when the accounting treatment of State land is stirring wide debate in economic and professional circles, this clarification sets the record straight from an international accounting and professional perspective.
With reference to the article published in Al-Eqtisadiyah newspaper, issue 620, on 1 April 2026, on “The accounting treatment of State land and the role of auditors”, we wish to offer an objective professional view that rests on the international standards adopted worldwide. This response aims to correct certain misunderstandings that may arise from confusing the legal aspect with the accounting aspect, while emphasising that the work of auditors is governed by a strict and internationally unified professional framework, and not by personal judgement.
The professional reference point: compliance with international standards
Auditors are bound, by regulation and by law, to apply the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB), with the aim of ascertaining that the financial statements present fairly and clearly the financial position and performance in accordance with International Financial Reporting Standards (IFRS).
Economic substance over legal form: the fundamental principle
Accounting treatment under IFRS rests on a firmly established principle: “economic substance over legal form” (substance over form). This principle means recognising assets on the basis of economic control and expected future benefits, and not solely on the basis of bare legal ownership. Accordingly, the absence of full legal ownership does not necessarily preclude accounting recognition, provided that the recognition criteria set out in standards such as IAS 16 and IFRS 16 are met.
The main confusion in the article arises where it ties the accounting treatment (which reflects economic reality) to the purely legal characterisation of ownership. The accountant does not create legal ownership, but records the economic right; and the auditor does not rely on management’s opinion alone, but evaluates it professionally in accordance with the International Standards on Auditing (ISA 500 and ISA 540).
Response to the main points raised in the article
1. Recording land as “freehold” (points 1, 3 and 4):
Sound accounting treatment distinguishes between full ownership (IAS 16) and rights of use arising from long-term contracts, which are recorded as a right-of-use asset in accordance with IFRS 16. Classifying a right of use as freehold without justification is an error of application, but it cannot be generalised to all cases.
2. Relying on management’s opinion alone (points 2 and 8):
An inaccurate claim. The auditor is required to obtain sufficient audit evidence and to evaluate management’s assumptions in accordance with ISA 500 and ISA 540, together with applying the going concern assumption in accordance with IAS 1.
3. Failure to disclose risks (points 5 and 6):
IAS 1 and IFRS 7 require clear disclosure of the material risks and the uncertainty associated with land contracts.
4. Accusing the auditor (points 7, 9 and 10):
The auditor’s role is to express an independent opinion in accordance with ISA 200, while assessing and testing risks in accordance with ISA 315 and ISA 330. He may not be accused of “waving the matter through” unless there is a documented breach.
5. Inflation of values and the valuation of land (points 11-14):
IAS 36 addresses any potential inflation through mandatory impairment tests, while IFRS 13 governs fair value measurement on reliable bases.
6. The risk of the company’s collapse (point 15):
This is classified as a business risk, and is dealt with through appropriate disclosure in accordance with IAS 1 and IFRS 7.
Conclusion
In conclusion, International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISA) constitute a firmly established global professional framework, endorsed by the regulatory authorities in most countries of the world. Auditors work in strict adherence to these standards, and not according to personal opinions. Any individual errors of application – if they exist – do not reflect the substance of the standards, and may not be generalised or used to cast doubt on a trusted international accounting framework.
We hope that this clarification will contribute to strengthening sound professional understanding, and we stand fully ready for any further discussion.