Statutory Audit Requirements in Dubai, UAE for 2024

UAE, renowned as the Investment Gateway to Northern Africa and the Middle East, hosts numerous enterprises catering to North African and Arab markets, attracting substantial investment due to its business-friendly environment and robust legal framework safeguarding corporate rights.

Multiple laws and regulations govern UAE companies, overseen by various governmental bodies. For instance, the Federal Tax Authority (FTA) handles VAT matters, while free zone authorities manage licensing, incorporation, and related affairs. Dubai and UAE-based companies are obliged to comply with diverse statutes.

Understanding Statutory Audit:

A statutory audit, mandated by national law, serves as a mechanism for governments to verify the accuracy and fairness of a business's financial data, safeguarding shareholders' interests.

In the UAE, public sector entities must undergo regular statutory audits to ensure alignment with government regulations. Each governmental organization within the UAE mandates the auditing of its accounts by designated statutory auditors.

Preceding statutory audits, audit service teams in the UAE must undertake several preparatory steps. A statutory audit constitutes an impartial assessment of a company's financial statements. Statutory auditors, appointed by shareholders during annual general meetings, serve terms typically spanning three to five years.

Independent entities and statutory audit firms conduct these audits, offering comprehensive evaluations of company accounting practices to present a transparent depiction of the company's financial health. The UAE government may enlist the services of Dubai-based statutory audit firms to aid companies in reviewing business records and offering insights. Occasionally, statutory audits may be commissioned by the government to scrutinize business performance.

Here Are the Criteria for Statutory Audits in Dubai, UAE for 2024:

Auditors must review several documents including:

·       Information pertaining to fixed assets

·       Data on all statutory dues and other obligations

·       Comprehensive details of company transactions

·       Bank statements for all accounts, including transaction details and financial receipts

·       Inventory particulars

·       Information on both verified and unsecured credit, loans, and advances

·       Total payables and receivables

·       Specifics on local and import purchases

·       Breakdown of overhead costs, including salaries for management and staff

·       Information regarding profits and other allocations

·       Documentation regarding all statutory dues

Statutory audits are mandatory in free zones, with companies required to furnish audited reports for annual license renewal. This is a standard requirement across most UAE free zones. Additionally, companies may need to provide the same information to a designated Company Liquidator.

Every branch of foreign companies operating in the UAE must submit an audited report annually to regulatory bodies. This helps management gauge the company's performance and the efficacy of various operational controls.

Shareholders demand audited financial documents to ensure transparency and accuracy in the company's financial affairs. These reports aid investors in conducting risk assessments and making investment decisions. Moreover, banks and financial institutions in Dubai, UAE necessitate audited financial statements before approving loans or releasing capital.