About Audit Services


About Audit Services


Auditors provide an independent assessment as to the ‘truth and fairness’ of financial statements. To give a ‘true and fair’ view, financial statements must not be materially misstated and must be prepared, in all material respects, in accordance with accounting standards and legal requirements.

Having your financial statements verified by an external auditor enhances the reliability of the financial statements that are produced by the management of a company and provides more credibility in the business marketplace. Providing audited accounts offers assurance to shareholders, lenders, creditors and potential investors, making you more likely to be successful in achieving your goals.

Under the UAE Federal Commercial Companies Law, it is mandatory for all Mainland companies to have their financial accounts audited on an annual basis by a licensed auditor. Annual audited financials are also mandatory for more than 30 Free Zone licensing authorities and more authorities are expected to follow suit.

The majority of UAE companies, both Mainland and Free Zone, have their financial year-end on 31 December. The first audit report can be prepared for any period between six months and 18 months, to be calculated from the date of registration of the company, and subsequently for periods of 12 months.

Some Free Zone authorities require companies to submit a copy of the annual audited accounts to them within three to six months of company’s financial year-end, while others may require such reports to be submitted at the time of renewal of trading licence. Failure to submit audit reports within the deadline may result in penalties and companies even run the risk of the non-renewal of their trading licence.

Other key reasons to ensure that an annual audit report is undertaken by companies in the UAE are as follows:

01
Federal Tax Authority: The FTA may request annual audited accounts to corroborate the accuracy of an entity’s VAT filing in case of VAT audit.
02
Economic Substance and Country-by-Country reporting: Audited accounts will provide strong supporting evidence for ES and CbC reporting.
03
Liquidation: During liquidation of a company, audited financials are one of the key documents required by liquidator to prepare the Liquidator’s Report.
04
Reliability: Having the financial statements verified by an external auditor enhances the reliability of the financial statement that are produced by management
05
Risk identification: As part of the audit, auditors will generally highlight any risks or lack of internal controls associated with the company.
06
Business Valuation: An audit report is very important to understand the net worth of a business, especially if there are multiple investors or if the whole or part of a business is being considered for sale.
07
Federal Bankruptcy Law: Access to regularly audited financial statements enables directors to determine the risks of insolvency more swiftly and reliably, which may assist in avoiding liability for wrongful trading under the Federal Bankruptcy Law.
08
Creditworthiness: Banks, credit bureaus and vendors will always require audited financials to gauge the creditworthiness of a business.
09
Tender Submissions: Government agencies and large companies will generally require companies to submit audited financials along with their tender for a contract.

UAE companies are required to maintain their records for a minimum of five years. The set of documents required to undertake an audit includes but is not limited to:

01
Legal documents, Trade Licence, Share Certifications, Memorandum and Articles of Association
02
Trial Balance of the company, and Management Accounts (generally comprising Profit & Loss Report and Balance Sheet) if maintained.
03
Bank statement, closing balance confirmation, closing ‘cash in hand’ balance confirmation
04
General Ledger transactional listing and evidence of all the transactions
05
Fixed Asset Register, Accruals, Prepayments, Fixed Deposit Schedules
06
Payroll Data and Directors’ Remuneration, including commission and bonuses
07
End of Service Benefit calculation and provisions
08
Board Meeting Minutes and Dividend Resolutions
09
Loan Statements, Leases, Tenancy Agreements, and any material contracts
10
Stock Confirmations, if applicable.
11
Tax Registration Number (TRN) certificate and copy of VAT Returns
12
Debtors and Creditors Balance Confirmation
13
Shareholder Balance Confirmation

The audit of an entity can only be carried out by an independent auditor who is registered and approved by the regulatory authority of that entity.

Sovereign Corporate Services works with carefully vetted local and international audit firms and will match our clients to an audit firm according to the particular requirements and budget of the business. We can also provide full support during the audit process by liaising with auditors, preparing necessary schedules, confirmation letters and answering queries on behalf of clients. Our team of qualified accountants can also provide bookkeeping services and assist you to bring your books up to date for audit purposes.

If you require any further information or assistance, please contact Sovereign Corporate Services at accountingdxb@sovereigngroup.com

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