Accounting Standards in Dubai
17

Jul 2019

The process of company establishment has been continuously booming in Dubai. Every year a large number of companies get registered, starting from a sole proprietorship to LLC, Joint-stock Company and other types of business entities. As per the Emirati Government rules and regulations, registered business entities are required to follow accounting standards in Dubai. If you are a business owner, or an entrepreneur holding a dream to establish or expand your company in Dubai, then it is essential for you to maintain knowledge on it. This treatise will give you complete information regarding the set standards. Let’s proceed.

Accounting Standards

A general guideline has been set as a standard ground which contains a specific set of principles, standards and procedures that has been set by the International Financial Reporting Standards (IFRS), to provide transparency when it comes to financial reporting. Following the UAE Commercial Company Law No. of 2015, the companies established in Dubai, and listed in the Abu Dhabi Securities Exchange (ADX), NASDAQ Dubai, Dubai Financial Services Authority (DFSA) needs to abide by the accounting standards. Now, let’s move ahead and know about the accounting reports.

Accounting Reports

The accountant of a business organization ends up analyzing and interpreting the book of accounts precisely, at the end of which accounting reports are generated. These reports contain the complete scenario of the company’s financial scenario and is a compilation of financial records. Additionally, they also highlight clear information regarding the utilization of company finance that serves useful to the shareholders. The accounting reports generated by a company helps an auditor to carry out the external audit process in a hassle-free manner.

The different types of accounting reports that get generated and is essential for every business are:

Income Statement

Highlights the revenue earned during a specific period, and is used to judge the business performance. Once the income statement gets prepared, you can have a look at the different aspects like revenue earned, tax expense, comprehensive income etc.

Balance Sheet

The balance sheet highlights the assets possessed and the liabilities to be borne by an organization. The sheet gives a complete picture regarding the liquidity and financial reserves if the organization. While preparing a balance sheet, an accountant might end up preparing it in two different formats: vertical and horizontal. 

Statement of Cash Flows

This document ends up highlighting the cash outflow and inflow transactions that take place in an organization. The preparation of the statement of cash flows focuses on three areas of business namely,

  • Operating Activities
  • Investing Activities
  • Financing Activities

Audit and Certification

According to the regulated authorities, it becomes essential for a business organization to conduct the audit process in the premise. An external auditor is appointed to carry out the audit process, to scrutinize the company’s proceedings, and assigns a score. Achieving a high rating in the audit report helps a business to uplift the goodwill in the eyes of the Government, whereas scoring low would severely harm the company’s reputation. By the end of the audit process, an audit report gets prepared that states the insights of the operation conducted as well as the relevant suggestions.

Now, it becomes essential to understand that establishing a company does involves these complexities that need to be dealt at a later part after the business operations are carried out. To deal with the process in-house, it turns out to be quite challenging and time-taking. Training the in-house team to become an expert consumes time and money. To deal more effectively, it is recommended to join hands with professional accountants who can deal with the process in an easy way.

Benefits of Hiring a Professional Accountant

By hiring a professional accountant, you will be able to achieve the following benefits:

1.Proper Utilization of Time & Resource

Once a professional accountant handles your business books, you can utilize your resources in a better way. Instead of dedicating your precious time on managing accounts books, you can use the same in business planning and strategizing.

2.Less Burden & Error-Free

Dealing with accounting books turns out to be a tedious task, which increases the probability of errors. Taking business decisions on inaccurate data might bring massive loss to your business By assigning or outsourcing your accounting records, you reduce the overall burden and can focus on other priorities, as the chances of error get minimized to a great extent.

3.Fast Process

If you conduct the accounting process in-house, your accountant might complete the work at a slow pace, while it’s not the same case with the professionals. Subject-matter experts deal with company accounts every day, and hence they can complete the tasks at a faster pace.

4.Gain Insights

By getting in touch with a professional accountant, you can gain many market insights regarding your industry and other industries as well. These professionals end up dealing with multiple clients dealing in different businesses and thus possess in-depth knowledge regarding them.

In short, we have got a gist regarding the accounting rules that turns out to be a compulsion for the registered companies. Failure to abide by the rules turns out to be trouble for the business entity and subsequently decreases the goodwill. It becomes utmost important that your company is in touch with a certified accountant, and the proceedings are carried out professionally. JAXA Chartered Accountants is here who helps business entities to carry out their accounting, auditing, taxation and VATproceedings in a hassle-free manner. Experts holding high-experience carry out the activities and can provide customized solutions to meet the requirements. To have a word with our experts, do contact us -we’d be glad to assist.