Tips to Prepare for a Statutory Audit in UAE

Dealing with the UAE Federal Tax Authority in an extended period of time can be a prospect that’s nerve-racking to most. This is especially so if the authorities are auditing your business. Fortunately, a dose of preparation and planning will be able to make a statutory audit free from financial harm or delays to your operations and company bottom-line. 

Reasons why FTA in UAE would audit the business

When preparing for an audit in UAE, you might question why you’re being audited. If you’re unsure as to why as the authorities did not provide a reason in the letter they provided for your audit schedule. Then here are the potential reasons why your business audited:

• You’ve claimed a hundred percent use of your company’s vehicle; 
• You've filed or paid VAT late year after year; 
• You're running a business that’s cash-intensive like a car wash or restaurant; 
• Excessive deductions were in the filed tax returns like questionable expenses for meals and client/team entertainment;
• Inflated salaries paid to staff members who are also the shareholders or owners; 
• Massive amounts reimbursed as business expense;
• A massive amount reported as charitable contribution of the business 

If any of the aforementioned is applicable to your business, then you may have to reconsider your business practices. If you make just minor changes onto your business operations. Then there is a chance that you lower your risk for being flagg by the FTA for an audit. 

Find more: How to Perform Audit for Inventory in UAE

What to do to prepare for a Statutory Audit in UAE

If you have been notified about an upcoming audit that will done by the FTA themselves. It’s highly advise that you seek the help of a reputable firm in UAE. An audit service in Dubai UAE will help you prepare for the audit and make sure you are equipped in handling obstacles which may arise. 

The following steps should also taken by company management to prepare for a statutory audit in UAE:

• Keep track of the finances – check your company's financial records. If you are following the approved accounting and bookkeeping practices all throughout a fiscal year, then it is likely that you have nothing to worry with an audit. You can also ask a firm that offers audit services in UAE to check your books. The less time you are spending on reconciling books and discovering damaging mistakes, the more time you will have in focusing on your business operations. If you will do the checking yourself, make a commitment in reviewing financial accounts regularly. This will ensure that you maintain accurate records throughout the year. When you get audit, there will no scrambling as your company records updated and accurate. 
• List down the questions you might be asked – of course, the FTA doesn’t wish to comb through each detail of your business’ finances just like you don’t. More often than not, the authorities will flag you for a surprise audit based on a problem they have found. Their questions focused on the areas that they found to erroneous. If you review your financial records thoroughly before an audit begins officially, then you will anticipate areas of interest. Cooperating with the tax authorities with an issue in your books will also lesson suspicion of fraud. You'll be able to expedite the entire audit process, too! 
• Prepare the necessary documents – the FTA will be requesting several different kinds of documents from your business. You would want to prepare all the paperwork beforehand before deadlines imposed on your business in order to speed things along. If you have the documents required by authorities, then you will also be able to avoid suspicion of any fraudulent behavior. 

Find more :What is the Difference Between a Qualified and Unqualified Audit Report?

Documents that the FTA may request

The following are the documents which often requested by the FTA:

• Bank receipts and bank statements – you'll be required by the authorities to present documents issued by banks from corporate accounts. They may also check your personal accounts, receipts, and cancelled checks. 
• E-records – electronic statements and records are now acceptable. Records of e-transactions must include details of the payee, date of payment, and amount paid.  
• Journals, ledgers, and books – a business may not be required by authorities to maintain formal books. However, if you are to maintain them, then you required in providing them to the FTA.
• Equipment records – all assets which are used for professional and personal purposes like computers and mobile phones are considered as listed property. Records that pertain to the items may also be requested by authorities.  

Audits ordered by the local tax authorities in UAE are stressful for most businesses. After all, even the slightest errors can call for fines and penalties. Contact us here in Farahat & Co  one of  Top auditing firms in Dubai today if you wish to speak with our team specializing in UAE audit.