A financial audit is conducted to provide an opinion whether “financial statements” (the information being verified) are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organisation. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.
High Quality and Independent Auditing is a critical element in every company. It is evident that a free and fair auditing improves company’s reporting. Furthermore, auditing enhances transparency, credibility, and relevance in reporting. Auditing recognizes all the possible evidence that formulates and evaluates the opinion, particularly by communication that it carried out. If the auditing process is carried out by an independent auditor, it often makes essential suggestions to improve controls and enhance the operating efficiency.
Consequently, Auditing helps the accountants to detect and prevent any possible Errors and Frauds. It also maintains accountability throughout the company. Additionally, an auditing practice helps a company to comply with rules and regulations stipulated by the legal authorities. In short, auditing is considered as the foundation of good and effective governance in any organization. For the betterment and growth of the business organizations, the requirement of annual audit reports (Balance sheet and profit and loss accounts) in the UAE Free Zones should be viewed as a positive step by the legal authorities.
Auditing is mandatory for most of the Free Zone Companies especially those registered under Jebel Ali Free Zone Authority (JAFZA) in accordance with the Jebel Ali Free Zone rules and regulation. The clause (51) under the Implementing Regulations No. 1/99 states that the Free Zone Companies in UAE, Dubai, and Jebel Ali shall appoint approved and Independent auditors to make the audit report of the annual accounts. The clause (49) of the above rules and regulations code states that the directors or anyone appointed on behalf of directors shall approve the annual accounts of each free zone companies registered under JAFZA. At least one director should sign the statement of financial position/ balance sheet and profit and loss accounts after being audited by an independent Auditor.
Therefore, as per the law, the Free Zone companies should appoint an auditor from those approved by the Free Zone Authority. In practice, the auditing services should only be delivered by audit firms that hold a valid professional license under the Economic Department. Eligibility of a firm is a key factor to consider when hiring an Auditor. Otherwise, you face the full force of the law.
Our professionals will assist you to prepare your financial statements according to International Financial Reporting Standards. Alya Al Marzooqi Auditing Chartered Accountants is a leading professional Chartered Accounting firm in UAE, providing quality services with efficiency thus providing you the best auditing services for both LLC and free zone companies.