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IAS 36 Impairment Testing · Dubai, UAE & GCC · CFA-Led · Big 4 Auditor Accepted

Goodwill Impairment Testing
UAE & GCC (IAS 36)

Independent IAS 36 goodwill impairment testing for UAE and GCC entities reporting under IFRS. Annual and trigger-based reviews. Cash-generating unit (CGU) analysis. Value-in-use DCF. Accepted by Big 4 and mid-tier auditors. CFA-led. Fixed fee from AED 15,000.

IAS 36 & IFRS 13 Compliant
Big 4 Auditor Accepted
CFA Charterholder-Led
Annual Retainer Available
Fixed Fee from AED 15,000
IAS 36 Impairment Goodwill Impairment Testing CGU Valuation Value in Use DCF Recoverable Amount IFRS Audit Support
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· Corvian Advisory FZ-LLC, Dubai, UAE

AED 15K+
Starting fixed fee (per CGU)
2–4 Wks
Typical delivery
Big 4
Auditor accepted
CFA-Led
Principal-led delivery
Impairment Testing Process

The IAS 36 Impairment Testing Process

IAS 36 requires a specific, documented approach to goodwill impairment testing. Here is how we work through it — from CGU allocation to recoverable amount determination and disclosure support.

01

CGU Identification and Goodwill Allocation

We start by identifying the cash-generating units (or groups of CGUs) to which goodwill has been allocated — or should be allocated — in line with the acquisition business case and IAS 36 requirements. Goodwill must be allocated to CGUs at a level no higher than an operating segment. We review the existing allocation and flag any issues before testing begins.

02

Indicator Assessment

For non-goodwill assets, we assess whether impairment indicators exist — both external (market, economic, interest rate, entity market cap) and internal (usage changes, deteriorating performance, management reporting). For goodwill, annual testing is mandatory regardless of indicators.

03

Recoverable Amount Determination

We determine the recoverable amount — the higher of value-in-use (VIU) and fair value less costs to sell (FVLCS). For most UAE private CGUs, VIU is calculated using a 5-year DCF with a terminal value, applying a pre-tax discount rate consistent with the WACC for comparable businesses in the same sector, adjusted for UAE market risk factors.

04

Sensitivity Analysis and Headroom

We calculate the impairment headroom (recoverable amount minus carrying amount) and run sensitivity analysis on key assumptions — typically revenue growth rate, operating margin, and discount rate. IAS 36 requires disclosure of the assumptions to which recoverable amount is most sensitive and the amount by which the key assumption would need to change for impairment to arise.

05

Report and Audit Coordination

We prepare a comprehensive impairment testing report with full methodology documentation, model assumptions, sensitivity tables, and IAS 36 disclosure support text. We engage directly with the company's audit team — Big 4 or mid-tier — to answer technical questions and satisfy auditor review requirements.

Impairment Triggers

When Do Impairment Indicators Arise?

IAS 36 requires entities to assess impairment indicators at each reporting date. For UAE and GCC entities, several triggers are particularly relevant given regional market dynamics.

External Indicators

Market & Economic Triggers

  • Significant decline in the CGU's market value or sector multiples
  • Adverse changes in the UAE or GCC economic environment affecting the business
  • Increase in market interest rates (raising the discount rate, lowering VIU)
  • Entity market capitalisation falling below the net book value of assets
  • Regulatory or political changes affecting the business model
  • Significant deterioration in comparable company trading multiples
Internal Indicators

Operational & Financial Triggers

  • Obsolescence or physical damage to key assets
  • Significant changes in how an asset is used or planned to be used
  • Evidence from internal reporting that economic performance is worse than budgeted
  • Management decision to restructure or discontinue the operations
  • Cash flows significantly worse than budgeted in the original acquisition model
  • Net cash outflows where net inflows were expected
Frequently Asked Questions

Goodwill Impairment FAQs

Goodwill impairment testing is an annual review (and more frequent review when indicators exist) required by IAS 36 to determine whether the carrying value of goodwill on a UAE entity's balance sheet exceeds its recoverable amount. If the carrying value is higher, an impairment loss must be recognised. Goodwill arises from business acquisitions under IFRS 3 and is not amortised — instead, it must be tested for impairment annually regardless of whether there are visible indicators of a problem.
A CGU is the smallest identifiable group of assets that generates cash inflows largely independently of other assets. Under IAS 36, goodwill must be allocated to CGUs that are expected to benefit from the acquisition synergies. The impairment test is performed at the CGU level — comparing the CGU's carrying amount (including allocated goodwill) to its recoverable amount (higher of VIU and FVLCS).
Recoverable amount under IAS 36 is the higher of: Value in Use (VIU) — the present value of future cash flows from the CGU discounted at a pre-tax rate; and Fair Value Less Costs to Sell (FVLCS) — what the CGU could be sold for in an arm's length transaction, net of disposal costs. For most UAE private CGUs, VIU (using a DCF model) is the primary approach, as observable FVLCS data is harder to obtain in private markets.
Not always required, but Big 4 and mid-tier audit firms in the UAE will request an independent specialist's report for significant goodwill balances — particularly where VIU is derived from Level 3 inputs (unobservable assumptions). An independent Corvian Advisory impairment report demonstrates that the VIU was not prepared by management with an interest in avoiding impairment, giving auditors the assurance they need to accept the carrying value.
IAS 36 impairment testing at Corvian Advisory starts from AED 15,000 for a single CGU review. Multi-CGU reviews or complex group structures typically range from AED 25,000 to AED 60,000. Annual retainer pricing is available for companies requiring impairment testing each year-end. All fees are fixed and agreed before engagement begins.

Need Independent Goodwill Impairment Testing in UAE?

IAS 36 compliant CGU impairment reviews accepted by Big 4 auditors. Annual and trigger-based. CFA-led. Fixed fee from AED 15,000 per CGU.

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