Companies operating in DMCC Free Zones are subject to annual audit requirements, as mandated by DMCC Authority Company Regulations. According to Regulation 71 of DMCCA Company Regulations, the directors of the company are required to prepare and approve accounts for each financial year, in accordance with International Financial Reporting Standards (IFRS). The Company must maintain accurate accounts that show a true and fair view of the annual profit and loss of the Company and of the state of the Company's affairs at the end of each financial year.
In accordance with Regulation 76 of DMCCA Company Regulations, companies must appoint audit firms in UAE who must examine and report on the accounts after the end of the financial year of the Company. An auditor must be registered by DMCC Authority as an approved auditor pursuant to approved auditor rules published by DMCCA from time to time.
Documents Required During an Audit
During an audit, a Company's auditor may request various documents from the directors of the Company to assess the financial position of the company to make a report to the Company's Shareholders. These documents include:
- Bank statements
- Credit/debit confirmation slips for all financial transactions
- Copies of bills and invoices
- Statement of deposits from the DMCC portal
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Latest trade license
- Registration Details for VAT and Excise Tax
Auditors' Report to the Company
Audit firms in UAE, approved by DMCC Authority, must make a report to the Company on the accounts examined by the auditor, pursuant to Regulation 77 of DMCCA Company Regulations. The auditor's report must include the following information:
- Statement of the auditor whether the accounts have been properly prepared in accordance with International Financial Reporting Standards.
- Declaring that the accounts give a true and fair view of the profit or loss of the Company for the financial year.
- Declaring that the accounts give a true and fair view of the state of the Company's affairs at the end of the financial year.
- Stating that the Company is undertaking only those activities as permitted under its License.
- Any other matter or opinion is required by the DMCC Authority from time to time.
Significance of Submitting Audited Accounts to DMCC
It is of significant importance for companies in DMCC Free Zones to ensure compliance with DMCC Authority Regulations. The key reasons for submitting audited financial statements to DMCC Authority include:
- License Renewal: Preparing annual accounts and complying with the audit requirements in UAE is an essential requirement for renewing a company's trade license in DMCC Free Zones. Failure to comply shall result in the failure to renew the license, which can adversely affect the company's operations.
- Transparency: Audited accounts enhance transparency by providing the company’s stakeholders, including shareholders, investors, and government authorities, with accurate and reliable financial information about the company.
- Legal Compliance: Compliance with DMCCA Company Regulations ensures that the company adheres to the relevant UAE laws and regulations, promoting legal and regulatory compliance.
- Trust and Credibility: Submitting audited accounts builds trust and credibility among stakeholders, promoting confidence in the company's financial health and management.
Deadline for Submitting Audit Statements in DMCC
DMCC guidelines stipulate that companies registered in DMCC Free Zones must submit their audited accounts within 180 days after the end of the financial year. To make the submission process efficient, companies can utilize the DMCC member portal for submitting financial reports and summary sheets.
Imposition of Sanctions for Non-Compliance
Section 22 of DMCCA Company Regulations stipulates, “A person who commits a contravention of these Regulations or any other regulation, rule, policy or decision administered by DMCCA will, at the absolute discretion of DMCCA, be subject to a Sanction”.
Therefore, a company that fails to meet the deadline for submitting audited accounts or provides inaccurate accounts will be subjected to several sanctions. This may include the imposition of fines or penalties of the amount specified by DMCCA; moreover, DMCC Authority will not renew the company's trade license or might suspend or terminate the company's trade license.
Seek the services of top Audit Firms in UAE
Seeking the services of an approved audit firm in UAE is essential for meeting audit requirements in UAE and maintaining the trust of stakeholders. With the support of reputable audit firms, businesses in DMCC Free Zones can navigate the auditing process successfully and continue to thrive in the dynamic business environment of DMCC Free Zones. Thus, contact us today and we shall be glad to assist you.