If you’re a business owner in Dubai, then it’s important that you understand audit services and how they work in the UAE. We’ll discuss all aspects of audit services in Dubai including what they are, how they work, and the benefits they offer to businesses. We’ll also take a look at the legal requirements for auditing in the UAE. Plus, we’ll also give you a few tips on choosing an audit firm that’s right for your business. If you’re looking to learn more about audit services in Dubai, then read on!
An audit service is a process whereby a business’s financial statements and records are reviewed by an independent auditor. The purpose of an audit is to assure that the financial statements accurately reflect the business’s financial position. A business’s financial records need to be looked at carefully and objectively, without bias.
Audits can be performed on businesses of all sizes, from small businesses to large companies. The audit process can be completed either in-house (internal auditing) by the company’s staff or externally (external auditing) by a certified audit services agency.
Internal auditing is carried out by one or a team of in-house auditors to examine, scrutinise and improve business operations. Those completing an internal audit are, of course, employees of the business. This means they are well-versed in business operations, which may include financial processes.
Internal Auditing is important to:
- Identify business risks associated with your daily operations
- Check and verify the business’ financial data
- Improve the overall performance of your business, its procedures and operations
- Ensure your organisation’s compliance is up to date
- Help facilitate an easy external audit process
Each organisation is different and therefore each internal audit process may vary. Generally, an initial audit plan is prepared and the relevant staff are informed of the upcoming internal audit.
Then, information is gathered from conducting the audit. This could involve reviewing taxation, accounting, payroll and financial statements of the business. In some cases, several years’ worth of information is examined by the internal audit team.
Next, an audit report is drafted, finalised and delivered. Finally, an opportunity for feedback from different departments within a company is often the last aspect of an internal audit before its completion.
Businesses in the UAE and Dubai are required to initiate a mandatory external audit many times across the lifespan of the company. A third-party external auditor is engaged by the shareholders of the company. They’ll provide an objective and accurate evaluation of the company’s financial status. After a business has been audited, the external auditors prepare a completed audit report. This summarises the details of the auditing process, along with any concerns and recommendations going forward.
External Auditing is important to:
- Ensure adherence to the GAAP and IFRS compliance standards
- Deliver impartial, precise reporting conducted by experienced and qualified auditing professionals
- Assist with financial anomalies that arise due to internal auditing
- Add a layer of credibility and quality assurance to the business.
In Dubai, the process for conducting an external audit is more formalised compared to an internal audit. First, a professional, experienced external auditor is hired to handle the audit.
In many cases, a company that offers auditing services will provide one or several consultants to a company to complete a financial audit. Here, the auditor makes a financial assessment of the business, as well as undertaking a company audit. Up to 5 years’ worth of financial records is reviewed as standard practice for UAE audit services.
The audit process typically involves reviewing the financial statements of the business, testing internal controls and procedures, and assessing compliance with UAE laws and regulations.
Once everything has been reviewed and analysed, a report is written and formally submitted by the external auditor.
All businesses operating in the UAE are required by law to have their financial statements audited by a licensed audit firm. The audit must be performed per International Financial Reporting Standards (IFRS) and the results must be submitted to the UAE Ministry of Economy within six months of the end of the financial year.
In Dubai and the UAE, the general rule for businesses is to maintain financial and company records for a minimum of 5 years. If you have a business here and you’re complying with this requirement, it’ll make life easier when it comes to auditing.
The answer is yes and no. The UAE Commercial Companies Law stipulates that every company must assign professional auditors to assess and audit their financial records. The auditor must be registered with the Ministry of Economy in the UAE.
So technically, the auditing of companies located on the UAE mainland is mandatory.
Interestingly, however, while the law states that auditing is to be prepared and carried out for UAE and Dubai businesses, it does not enforce the report submission process. In other words, it’s a requirement that external auditing takes place, yet submitting a report is not always enforced or followed up.
There are several free zones in which the mandatory submission of audited financial statements is not required.
Some of these include:
- Dubai Multi Commodities Centre (DMCC)
- Dubai Airport Free Zone (DAFZA)
- Dubai World Central (DWC)
- Jebel Ali Free Zone (JAFZA)
- Dubai International Financial Center (DIFC)
- Dubai Silicon Oasis (DSO)
- Fujairah Creative City Free Zone
Foreign companies must also submit their audited reports every year.
Maintaining accurate financial records for any business will always make the auditing processes that much smoother. However, it can be challenging for Dubai-based businesses to keep up with accounting and bookkeeping.
This is especially true if you take into consideration managing your payroll, account reconciliation, VAT reporting, financial statements and maintaining overall business performance. If you don’t properly manage your finances, it could lead to some serious legal issues down the line.
The Ministry of Finance recommends businesses should be maintaining their financial records and statements for 10 years. In fact, UAE Federal Law underscores this point, as it helps with tax compliance. However, many UAE businesses may not be aware of the specific details of financial record keeping, and what their obligations actually are.
Firstly, transactions of up to AED1000 must be accompanied by a receipt. This includes cash transactions as well. All receipts must be in the business name and include information relevant to the transaction, such as the date and sale recipient.
Next, an obvious requirement for many businesses is the need to keep records of bank statements. Maintaining electronic bank statements helps with your company’s taxation obligations, and assists with the preparation of other paperwork, such as P&L statements and business budgets.
Then, there’s the all-important VAT returns records. All Dubai and UAE-operated businesses must be compliant with the VAT regime. This tax applies to certain eligible businesses and should be aligned with best industry practices.
Any other original supporting documents that are relevant to your business dealings, finances and operations must also be maintained. These can include credit notes, contracts and original invoices. Also, it’s a good idea to keep bank statements for businesses that aren’t VAT-registered.
If the thought of keeping accurate financial data for your business feels stressful, don’t worry, you’re not alone. Most Dubai entrepreneurs and business owners find the task of account keeping overwhelming.
So what’s the solution?
Many businesses have found that outsourcing their accounting and bookkeeping services is the best solution. This frees up time and resources within your business so you can focus on more important operations.
Virtuzone offers tailored accounting services for all businesses. Whether you’re an entrepreneur, involved in a startup, SME or a large-scale enterprise – there’s an accounting services solution to meet your unique business needs.
Keeping accurate financial records also means that auditing is less stressful. This is a great benefit to outsourcing your accounting needs to experienced professionals.
We can assist with various accounting services to streamline your business operations, including:
- Business bookkeeping
- Account reconciliation
- VAT returns
- Financial reporting
- Audit support as per International Financial Reporting Standards (IFRS)
Read on for answers to some frequently asked questions on audit services in Dubai.
In the UAE, all businesses operating in the UAE are required to have their financial statements audited by an independent and licensed audit firm. The audit firm will survey the company’s financial statements and records to confirm they are an accurate portrayal of the business’s finances. This is important to maintain business integrity in the long term. Furthermore, it gives businesses scope to improve their processes and day-to-day operations.
Irrespective of the size of your business, audit services have many benefits. First and foremost, audits provide certainty to businesses that their financial statements accurately reflect their financial position. This is important for businesses when it comes to making decisions about investments, loans and other financial matters.
Additionally, audits can help businesses identify areas where they can improve their financial reporting and control processes. Finally, audits can also help businesses build credibility with investors, lenders and other stakeholders.
When you take advantage of an all-inclusive audit service, you get peace of mind that you’re keeping track of your financial performance, which helps you plan for the future growth of your business. Importantly, the best accounting and audit services should be managed by qualified accountants and adhere to the standards outlined in the International Financial Reporting Standards (IFRS) as well as Generally Accepted Accounting Principles (GAAP) guidelines.
Generally speaking, some important benefits of using auditing services in Dubai are:
- Maintaining business compliance
- Detects fraudulent or irregular business activities
- Course-correcting where necessary for the growth of your business
- Assists in company liquidation and tax submission
- Promotes transparent business operations for a positive business culture
Several reputable audit firms in Dubai offer auditing services to businesses across the UAE. These firms typically have a team of qualified accountants and auditors who are experienced in conducting audits as per IFRS rules.
When choosing an audit firm, it’s important to consider a few factors to receive professional and expert audit services in Dubai. Review the firm’s experience in auditing businesses in the UAE, their audit fees and their overall reputation. It’s also a good idea to request references from other business owners who have used the audit firm’s services as well.
Ultimately, the firm you choose to conduct an external audit of your Dubai business should have qualified professional auditors who have a deep understanding of your business structure and culture.
While a general company and financial audit are the most common types of auditing that occur, there are other auditing services in Dubai available to businesses.
IT audits are a fitting option for software or IT companies. If your business focus is on software and IT development or systems and data processing, then running an audit can help pinpoint issues in these areas of your company.
Most business owners and entrepreneurs will want to ensure their business’ tax records are accurate and up to date. A tax audit will determine the amount of taxes owed by examining accounting records, bookkeeping filings, corporate tax and VAT returns. In most cases, a standard external audit can detect any anomalies that relate to tax within the business.
If you need help with accounting services, including payroll management or you simply want to ensure your business is compliant on all fronts – we’ve got you covered. Virtuzone is one of the leading company and business formation service providers in the UAE.
We help thousands of UAE businesses each year get set up, right from the start. So we know exactly how to support your accounting and bookkeeping needs, no matter the size of your business.
Contact us today for more information on accounting, and auditing services in Dubai or any other business query.