The jurisdiction in which the firm was constituted determines the audit requirements. Firms organized on the mainland in the UAE must be audited. However, companies formed in free zones may be audited based on the authorities’ laws and regulations or legal framework. Companies that are not required to be audited are urged to guarantee that their business is running smoothly and without any issues.
WHAT TYPES OF COMPANIES MUST BE AUDITED?
All mainland corporations are expected to have their financial statements audited under the Commercial Companies Law. Financial records for these businesses must be kept for at least five years.
Audits are required of companies located in free zones. Companies must submit an audit report to the free zone’s authorities. Free zone companies (FZCO) and free zone businesses are included in this category (FZE). Even though free zone authorities do not demand the production of an audit report for specific enterprises, they should not forget that an audit report for the company itself should be created.
LEGAL REQUIREMENT OF AUDITING IN UAE
Books of Accounts must be correctly maintained in order to undertake a full, proper, and comprehensive audit. According to the UAE Commercial Firms Law No. 2 of 2015, all companies in the UAE are obligated to keep records for at least five years. Every firm must engage licensed auditors registered with the Ministry of Economy to have its books audited, according to Article 27 of Chapter 2 of UAE Commercial Companies Law No. 2 of 2015.
It is always in the company’s best advantage to have its books of accounts audited to guarantee that the financial statements provide an accurate and fair picture.
REQUIREMENTS FOR AUDITS IN THE UAE
All mainland firms must have their financial statements audited under the Commercial Companies Law. These businesses must retain their financial records for a minimum of five years.
Audits are not always performed on companies located in free zones. Companies are not required to submit an audit report by the free zone authorities. However, some companies must undergo a mandated audit of their finances. Free zone corporations (FZCO) and free zone businesses are included (FZE).
REASONS FOR HIRING AN AUDIT FIRM IN THE UAE
Companies hire audit firm in the UAE for several reasons. A firm may require a financial audit of its records for government auditing or financial counsel to avoid disaster. Companies use auditing services for various reasons, including professional support and financial guidance. Here are some of the most important reasons why a company should employ an audit firm in the UAE:
- Financial Statement Accuracy is Guaranteed
Financial records of publicly listed firms must be audited regularly by an independent audit company that provides auditing services. All of these financial statements must be pretty precise. Auditor in Dubai examine the correctness of a company’s financial transactions and determine if it adheres to UAE’s generally accepted accounting rules.
- Observance of all existing accounting standards
A company that provides audit and VAT filing services evaluates a firm’s accounting techniques and processes to ensure that it takes actions to prevent fraud and validate the integrity of financial statements. The auditor reviews the company’s internal standards for signing checks, processing vendor payments, and dealing with deposits. In addition, the organization must meet rules for persons with access to finances. An audit performed by a licensed independent auditor helps a firm and its creditors to determine if they are following established accounting rules and norms.
- Internal Controls Accurately Verified
Auditors check that internal controls and systems are in place for the companies whose audits. They identify critical areas that require improvement and assess the effectiveness of new technologies and accounting processes. Auditors can also inspect the accuracy of record-keeping procedures and search for fraudulent occurrences buried inside papers. Auditors examine an organization’s financial data to ensure that taxes are paid on time and that systems for safeguarding financial data are in place.
- Increases Shareholder Confidence
Thanks to auditing, creditors and investors may be sure that the company’s money is being correctly managed. Auditors protect the public from investing in firms that engage in unethical business practices or make misleading assertions in an attempt to scam investors. Auditor in Dubai can determine if financial statements and accounting records accurately reflect a company’s financial status by analyzing financial statements and accounting records.
- They can assist a business in maintaining its reputation.
It will be impossible for you to maintain track of the day-to-day financial transactions of all your companies if you are an entrepreneur who manages many businesses. If your firm engages in a complex transaction at any level, the odds of obtaining external financing from banks, the stock market, or private investors are slim. All creditors examine your creditworthiness, and if they discover this sort of transaction, they will instantly reject your application. An experienced auditor in Dubai understands how to maintain a company’s books clean and avoid problems like these.
- A Professional Accountant can identify fraud.
People with insider access to significant accounts are frequently involved in fraudulent actions, making it difficult for an ordinary accountant to intervene. On the other hand, a competent auditor in Dubai, who has dealt with similar difficulties in the past, can hunt down such actions and provide you with information about the individuals involved.
- An auditor aids in the effective operation of a business.
You have a greater understanding of operating a business as a business owner than anybody else. On the other hand, an auditor in Dubai is trained to keep accounts clean. There’s a risk that none of his ideas will immediately influence your firm, but they will help it run smoothly in the long term. Aside from that, auditors can help you with everything related to corporate development, mergers, acquisitions, or financial transactions. Even though hiring a professional editor will cost money, you will get long-term benefits to offset the costs.
Top firms like Farahat & Co. is a financial audit firm in Dubai, UAE that provides bookkeeping, accounting, and auditing services. We have a capable team of internal and external auditors who can conduct financial, statutory, and due diligence audits to ensure that firms comply with regulatory obligations and build their business processes effectively and efficiently.