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.
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:
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:
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:
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.
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.
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.
Read More: How to Choose an Auditor in UAE: Three Key Factors to Consider