A Digital Accounting Framework for Enhancing Solvency and Financial Evaluation in Non-Bank Financial Institutions: Evidence from Egypt

Abstract

Purpose and Design : This study develops a Digital Accounting Framework grounded in Basel III, the amended Egyptian Accounting Standards (EAS)—particularly those addressing intangible assets—and the recent FRA Board Decree No. 137/2025 on Financial Solvency Standards for Non-Banking Financial Institutions (NBFIs). The purpose is to integrate solvency regulation with accounting and auditing standards to strengthen financial solvency and evaluation in Egypt’s NBFI sector. Method and Approach : A comparative applied methodology is adopted. First, a regulatory analysis examines FRA Decree 137/2025 and related FRA resolutions on capital adequacy, liquidity, and risk concentration. Second, the study maps Egyptian Accounting Standards against IFRS/IAS benchmarks, focusing on IAS 36 (Impairment), IAS 38 (Intangible Assets), and IFRS 9 (Financial Instruments). Third, applied case studies from Egyptian NBFIs test how a digital accounting framework improves solvency reporting and financial evaluation in digital environments. Findings : The results show that incorporating IFRS-aligned digital reporting within the FRA’s solvency framework strengthens capital buffers, enhances liquidity monitoring, and improves the valuation of intangible-rich companies. The proposed model reduces inconsistencies between accounting reports and regulatory solvency ratios, while providing FRA and auditors with clearer stress-testing and solvency evaluation tools. Originality and value : The study’s originality lies in combining: 1) Basel III solvency regulation, 2) Egyptian Accounting Standards (amended for intangibles and fair value), 3) FRA Decree 137/2025 and prior solvency decrees within a single digital accounting and auditing framework. This integrated approach has not been empirically applied in Egypt’s NBFIs. Theoretical, Practical, and Social Implications : Theoretically, the paper extends solvency research by embedding accounting and auditing standards into prudential regulation. Practically, it provides FRA, auditors, and policymakers with a roadmap for harmonizing solvency ratios with accounting evaluations. Socially, it promotes investor protection, transparency, and financial stability, reinforcing Egypt’s vision for a resilient non-bank financial sector.