There are a number of benefits of Auditing a company, and because of these benefits, every company should be audited. The conducting of an audit of the company will help the management to understand the present condition of the company and will also help in ensuring that the company is following the set path as expected by the management.
This is what should happen in theory. In practical, every country has its own set of rules and regulations regarding the Audit of a company, and not all companies need to be audited according to their rules and regulations.
The United Arab Emirates also has a set of rules for the jurisdiction which needs to be followed by all the companies which have been set up in the country.
Audit in Mainland Companies
According to the Commercial Companies Law, all the companies which have been established and registered in the Mainland United Arab Emirates need to conduct a yearly Audit of their company. for such companies, it is mandatory to maintain financial records for at least five years. The auditing of a company in the mainland is necessary, but not all companies need to submit the audit report to the concerned authorities.
Audit in a Free Zone Company
According to the Commercial Companies Law, the companies which have been established and registered in the free zone do not necessarily need a yearly financial audit with a few exceptions. There is some form of companies which have to conduct a mandatory yearly audit in the Fee Zone and submit the audit report to the concerned authorities of the free zone. These types of companies include Free Zone Companies (FZCO) and Free Zone Establishments (FZE)
In order to understand the above statements, we need to be able to differentiate between a mainland company and a Free zone company.
Difference between Mainland Company and Free Zone Company
A Mainland Company is a company which can carry out its business activities all throughout the local markets of the United Arab Emirates an also can conduct its business outside the borders of the United Arab Emirates without any hindrances or restrictions.
A Free Zone company is a company which has been registered and established in one of the specifically designated business zones in the country which are referred to as Free Zones. These companies are allowed to conduct their business activities inside the same free zone or out die the borders of the country but not with the Mainland Companies. There are numerous free zones in the UAE, and each of them is dedicated to a different sector or industry.
In the earlier years, all the foreign nationals which wanted to set up a company in the United Arab Emirates needed to take the assistance of a local sponsor. This local sponsor had to own at least 51% of your company, and only then the foreign nationals were allowed to set up a company in the country, but now the rules and regulations have been changed. Now the government of UAE has allowed for complete ownership of the business for certain specific sectors and industries.
Even though your company may not require Auditing services or may not need to conduct yearly auditing of your books of accounts but there are a number of benefits of auditing the books of the company. To know the various benefits of auditing refer to our previous blog “How can your Business benefit from Auditing Services in Dubai?“
Need for an Audit Firm in the UAE
In the last few decades, we have seen substantial growth in the number of companies and businesses coming into the country to tap into the middle eastern markets. As the number of companies grows, so it the demand for financial firms which will provide Reliable and Dependable Auditing Services.
If you are looking for such Auditing services in the UAE, then you can take the assistance of JAXA Chartered Accountants. JAXA is a reputed name in the UAE in the field of finance and provides optimum and customized financial solutions for the companies in need. They also provide various other financial services such as Accounting Services, VAT and Tax related services and various other services. For more details, Contact Us. We will be happy to help.