Do I Need an Audit in the UAE ?

Audit of accounts is mandatory for some forms of entities in the free zone like the free zone companies (FZCO) and free zone establishments (FZE), for branch of local and foreign company audit report may not be necessary in most free zones. In order to finalize the audit it is obvious that the accounting records and documents must be available and well maintained.

In UAE the general requirement for businesses is to maintain their records for no less than five years. The Commercial Companies Law states that the audit of accounts are necessary for all companies in the mainland.

Generally, though the law stipulates the preparation of the audit report, the submission of the same is not enforced by the authorities and hence many organizations do not follow the same. Some free zones, particularly in the northern emirates do not require the submission of audited accounts for certain companies; one needs to bear in mind that this waiver is only for the submission of audit report to the authorities however the preparation of audit report for the entity itself cannot be overlooked.

The maintenance of accounting records will become more important for nearly all kind of entities in UAE in light of the forthcoming VAT in 2018. Companies have generally a time period between 3 to 6 months after the close of their financial year/period to complete the audit report and submit to the general assembly. Maintenance of accounting records and audit of same also assists the management to understand the performance of the company and areas which need more attention.