In Dubai, statutory audit requirements are governed by the Federal Law and regulations set by the UAE's commercial and financial authorities. A statutory audit is a mandatory process that businesses must undergo to ensure financial transparency and compliance with local laws. The audit involves an independent review of a company's financial statements, including its balance sheet, income statement, and cash flow statements, to verify their accuracy and adherence to international accounting standards, such as IFRS (International Financial Reporting Standards).
The statutory audit requirement primarily applies to companies registered in the UAE mainland and certain Free Zones, especially those with a larger financial presence or those involved in sectors that are heavily regulated. For instance, companies with annual revenues exceeding a certain threshold, typically AED 1 million, are required to undergo an annual audit.
The audit is performed by an approved external auditor who assesses the company’s financial health, identifies any discrepancies, and provides an opinion on the fairness of the financial statements. The findings are then submitted to the relevant authorities, such as the Department of Economic Development (DED) for mainland companies.
Failure to comply with auditing & accounting standards in Dubai can result in penalties, fines, or even the suspension of the company’s trade license, making it crucial for businesses to maintain proper financial records and undergo regular audits.