The UAE is also known as the Investment Gateway to Northern Africa and the Middle East. The UAE is home to many companies that serve the North African and Arab markets. UAE is a top destination for investment due to its business-friendly policies and robust legal system that protects the rights of companies.
Many laws and regulations apply to UAE companies. Different government entities regulate different aspects of companies. For example, the Federal Tax Authority (FTA), which deals with VAT and Free zone authorities that deal with licenses and incorporation, as well as other matters. Companies in Dubai and UAE must also adhere to different statutes.
What is Statutory Audit: An Internal Audit Service UAE Definition
A statutory audit is generally an Audit that is mandated by the law of the country. The country’s government will use the statutory Audit to ensure that all data regarding the financial condition of the business is accurate and fair, protecting the shareholders’ interests.
UAE public sector companies must have a Statutory Audit performed on a regular basis to ensure compliance with Government regulations. Every government organization must have its accounts audited in UAE by a designated Statutory Auditor.
Before conducting statutory audits, there are several steps that the audit service UAE teams must take care of. The statutory audit is an independent, neutral evaluation of the financial statements of a company. The Statutory Auditors are elected by shareholders at an annual general meeting. They will be in effect for three to five years.
Independent entities, statutory audit firms conduct statutory audits. They provide an extensive review of company accounting and accounting processes. This provides a fair and transparent view of the company’s financial situation. The government must direct a Dubai statutory audit firm to assist the company in assessing business records and providing inputs. Sometimes, the government may direct statutory audits to evaluate and examine business performance.
What is a Statutory Audit Function?
The term Statutory indicates that statutory auditing must be done. A statute is a regulation, or law that has been enacted by an associated government. The Centre or the State may pass multilevel laws. A regulation can also be applied to any law that is set by the board of directors or management team of a company.
Audits are the examination of records that are held by an agency or company, a government department, or an individual. This involves analyzing different financial records and other areas. A financial audit can include reports from a Dubai, UAE company regarding revenue, benefits, returns of investment, expenditures and other matters. A variety of these elements can be used to determine a cumulative ratio.
A financial audit‘s purpose is usually to determine if funds were properly managed and if all required records and filings are correct. A statutory audit does not necessarily indicate misconduct. It is a formality that helps discourage criminal acts, such as misappropriating money. A professional third-party regularly scrutinizes different documents. Similar principles apply to other audit forms.
Read also : Practical steps for a Statutory Audit in Dubai
Document Requirements For Statutory Audit in Dubai UAE
These are several documents that auditors need to conduct statutory audits:
- Information about fixed assets
- Information about all Statutory Dues and Other Duties
- Details of all company deals
- Bank statements for all accounts with additional information on transactions and details of financial receipts
- Details about inventory
- Details on all company transactions
- Information regarding verified and unbound credit, loans, and advances
- Total payables, and receivables
- Details for local purchases and import purchases
- Overhead costs including Management and staff salaries
- Details concerning profit and other uses
- Details about all Statutory dues
Authorities in free zones require statutory audits. Companies are required to submit audited reports when renewing their annual license. It is a requirement in most UAE Free zones. The company management may be required to provide the same information to an appointed Company Liquidator.
You may also like : How to do a Statutory Audit of Company in UAE
Each branch of foreign companies that are registered in the UAE must submit an audited report each year to the authorities. This is to help company management understand how the company performs and what the effectiveness of various process controls.
Audited financial documents are required by company shareholders to ensure transparency and accuracy of the company’s finances. These reports can be used by investors to perform a risk analysis and make an investment decision. Banks and financial institutions in Dubai UAE will need to see audited financial statements of the company before they approve the loan or release capital.
How Audit Firms in Dubai Can Help You Streamline Your Internal Audit process
Audit firms in Dubai is one of the most respected accounting and audit firms in the UAE. Companies in Dubai and UAE can rely on us to help them with their statutory audits. Our experts also assist companies with matters related to bookkeeping and accounting as well as tax and auditing. If you have questions about statutory audits, please contact us. We are happy to help you!
Theshani is a Senior auditor and has experience of 4+ years in providing audit assurance and advisory services to a wide range of industry clients. She continues to stay on top of ever-changing industry dynamics by continuously learning and developing expertise.