For many UAE businesses, the annual audit is not optional. Free zones often require audited accounts to renew a licence, lenders ask for them, and some businesses must support their Corporate Tax return with audited financial statements.
Audits rarely run late because of the audit itself. They run late because the information is not ready. Working through this checklist before fieldwork begins will make the process quicker, cheaper and calmer.
Close the books properly
- Post every transaction for the year, including late supplier invoices and year-end accruals.
- Reconcile every bank account to the year-end statement, and be ready to explain any old reconciling items.
- Reconcile VAT. The VAT returns filed for the year should agree with the accounting records, or the differences should be explained.
Support the balance sheet
- Receivables. Prepare an aged list of customer balances and be ready to explain anything overdue. Auditors may write to customers to confirm balances.
- Payables and accruals. Prepare a supplier list that agrees to the ledger, and list costs incurred but not yet invoiced.
- Fixed assets. Keep a register showing additions, disposals and depreciation, with invoices for significant purchases.
- Inventory. If you hold stock, plan a physical count at or near year end, and keep the count sheets.
- Employee provisions. Calculate end-of-service gratuity and leave provisions for every employee, using current salary data.
Gather the documents auditors always ask for
- Trade licence, memorandum of association and any amendments during the year
- Significant contracts, leases and loan agreements
- Payroll records and WPS salary files
- Details of transactions with related parties, such as shareholders, directors and their other businesses
- Last year’s audited financial statements and any adjustments that came out of that audit
Plan the timing
Work backwards from your deadline. If your licence renewal depends on the audit report, allow time for fieldwork, for answering questions and for the report itself to be finalised. Starting the conversation with your auditor a couple of months before the deadline is usually sensible.
A note on independence
Your auditor’s job is to give an independent opinion on your financial statements. That is why the preparation work above is done by you or your accountant, not by the audit team. Keeping those roles separate protects the value of the audit report to everyone who relies on it.
The payoff
A well-prepared audit is shorter, involves fewer questions and produces fewer surprises. It also tends to leave you with better records for the year ahead, which makes the next audit easier still.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
