Businesses in the UAE need to stay ready for an audit all throughout the year. The tax requirements and increased emphasis on compliance means companies have to pay more attention to their internal controls and processes. Working with an expert, authorized local audit firm in Dubai can help businesses stay audit-ready all year.
What are the Audit Requirements in UAE?
The UAE mandates regular audits for all businesses operating in the country. Audits are a way for companies to show that they’re being compliant with the laws and following the international reporting standards. In the UAE, that’s the IFRS (International Financial Reporting Standards).
These are the major audit requirements for businesses:
- Every business has to maintain their financial records for at least five years. This includes reports, receipts, invoices, and employee payroll information.
- Most businesses need an external auditor to certify their financial reports. This has to be conducted by a government-approved auditor.
- According to Article 27 of Federal Decree Law No. 32 of 2021, every UAE company has to prepare annual financial statements and have them audited by a licensed auditor.
- Most free zones in Dubai require businesses to submit their audited financial statements to renew their trade license.
- Corporate tax and VAT filing requirements make audits an integral part of compliance for UAE businesses. Working with an >audit firm in Dubai can make this easy.
An Audit Preparation Checklist
True audit readiness is not just about collecting some documents at the end of the year, it’s a continuous internal process. A well-organized audit process starts with consistent bookkeeping and record-keeping. The following checklists cover what businesses should do every month, quarter, and year to stay audit-ready.
Monthly Financial Audit Checklist
- Reconcile all accounts: Match your balances with your financial records to spot any difference early.
- Update your General Ledger: Record every transaction and review the trial balance at the end of each month.
- Keep both digital and physical copies: Save all invoices, receipts, reports, contracts, and supporting files in encrypted, secure folders or safes.
- Review your internal controls: Document how your financial transactions are approved, recorded, and reviewed.
- Correctly process your payroll: Make sure you follow the WPS (Wage Protection System) and Labour Laws.
Quarterly Audit Readiness Checklist
- File your VAT returns on time: You should submit your VAT returns before the deadline.
- Carry out internal reviews: Go through your financial statements every quarter to check for irregularities.
- Update Accounts Receivable and Accounts Payable reports: Track your outstanding payments from customers and unpaid invoices to suppliers.
- Record employee benefits: Calculate gratuity and unused leave balances and record them correctly.
- Post accruals and provisions: Add expenses and revenues that belong to the current period but are not yet billed or paid.
Annual Audit Preparation Checklist
- Hire an external auditor: Your auditor has to be approved by the relevant UAE authority.
- Count your inventory and assets: Conduct a physical check and cross check them with your accounting records.
- Update your Asset Register: Record your final annual depreciation and amortization.
- Prepare your corporate tax calculations: Calculate your taxable income and apply the 9% tax.
- Document all related party transactions: Record all transactions based on market value (arm’s-length principle).
- Finalize your financial statements: Review your P&L statement, Balance Sheet, and Cash Flow statement.
- Complete trade license requirements: Your trade license and establishment card must still be valid. You cannot undergo an audit with an expired license.
A Document Checklist for Businesses to Stay Audit-Ready
- Previous audit statements (if any)
- General ledger and trial balance
- VAT returns, invoices, and supporting documentation
- Trade license
- Lease, property agreements
- Business incorporation documents
- Bank statements and reconciliations
- Supplier and customer contracts
- Inventory reports
- Payroll registers
- Employee records
- Fixed Asset Register
Get Expert Audit Services in Dubai From A&A Associate
A&A Associate is a leading audit firm in Dubai, providing comprehensive external and internal audit services. Our team is highly knowledgeable in international auditing standards and brings extensive experience in delivering objective and thorough audits to businesses throughout the country.
