Statutory Audit Requirements for a Company
23

Sep 2021

UAE is popularly known as Investment Gateway to the Middle East and Northern African region. Companies based in the UAE serve Arab and North African markets. The business-friendly policies of the UAE Government and a robust legal system based on international standards protecting the rights of the companies have made the UAE the top investment destinations. 

The companies operating in the UAE are subjected to many legal rules and regulations. Separate government entities govern different aspects of the companies, such as the Federal Tax Authority (FTA) dealing with all matters related to VAT, Freezone authorities dealing with Freezone company incorporation and licenses etc. In addition, companies must adhere to different statutes. 

Statutory Audit

A statutory Audit is generally a type of Audit mandated by the country's law as per different statutes. The statutory Audit will assist the country's government in ensuring that all the available data about the business's financial status is fair and accurate, thereby safeguarding the interests of the company shareholders. 

A Statutory audit is conducted frequently for the public sector businesses to ensure compliance with the Government rules. All Government organizations must get their accounts audited by an appointed Statutory Auditor in UAE.

There are several steps and other prerequisites which the company management should take care of before conducting the statutory audits. First, the statutory Audit involves an independent and neutral assessment of the financial accounts of a business. Second, the company shareholders choose the Statutory Auditors in an annual general meeting which will be valid for at least three years to around five years.

Statutory audit firms, which are independent entities, conduct statutory audits and provide a comprehensive review of company accounts & accounting processes, indicating a fair and transparent picture of the business's financial status. It is required to direct a statutory audit firm in Dubai to help the company assess business records and provide inputs. In some cases, statutory audits can be a directive from the government to examine and evaluate business performance.

Document Requirements for Statutory Audit

The following are some of the documents required by the auditors to carry out statutory audits:

  • Details of fixed assets. 
  • Details of all Statutory dues and other duties
  • Bank statements of all bank account with further information of transactions and the details of all financial receipts. 
  • Details of inventory
  • Details of all company deals
  • Information on verified and unbound credits, loans and advances
  • Total payables and receivables
  • Details of local purchases and imported purchases
  • Overhead costs, including Management and staff salaries
  • Details of profit and other uses
  • Details of all Statutory dues and other duties

Requirement of Statutory Audit in the UAE

  • Free zone authorities require statutory audits. The authorities require companies to submit their audited reports at the time of annual license renewal. Most of the UAE Freezones has made it a mandatory requirement.
  • Audited financial documents are required at the time of company liquidation in the UAE. An appointed Company Liquidator may demand the same from the company management.
  • The branch of the foreign companies registered in the UAE must submit their audited reports annually to the authorities.
  • Company management may require audited reports to clearly understand the performance of the company and the effectiveness of the different process controls employed by the company.
  • Company shareholders need audited financial documents for an accurate and transparent status of the company finances. Investors may use these reports to carry out a risk analysis to make a meaningful investment in the company.
  • Many Government authorities, such as local governments and municipalities, require companies to submit audited reports to ensure compliance.
  • Banks and other financial institutions would need audited financial reports of the company as part of the process to approve the loan and release capital.
  • Many companies require their suppliers to submit their audited financial reports before making a contract to ensure transparency.

How Can We Help?

Jaxa Chartered Accountants are one of the reputed accounting and audit companies in the UAE. We help companies in conducting the required statutory audits. In addition, our experts help companies in matters related to bookkeeping, accounting, tax and auditing. Please Contact Us if you have any questions regarding the statutory audits. We'd be happy to assist you!