Any company located in Dubai is required to keep proper accounts, as well as take into consideration the relevant UAE reporting requirements.
External audits independently verify financial records, enhancing transparency and ensuring regulatory compliance.
This guide presents an explanation of how external audits are done in Dubai and why they are necessary to uphold financial credibility.
The external audit is the audit of the financial audits of the company by an external or a third person. The auditor gives a free opinion as to whether the financial statements are in accordance with the IFRS and the statements are a fair presentation.
The main purpose of external auditing is
External auditors are independent, ensuring their opinions are unbiased and credible to stakeholders.
External audits must be conducted in various forms of business in Dubai. The Federal Decree-Law No. 32/2021 (UAE Commercial Companies Law) requires external audits.
Companies that require the external audits to be conducted on compulsory basis:
Additional situations requiring external audits:
Planning Phase
The external audit process involves four major phases: planning, internal control evaluation, evidence collection, and reporting.
Know company organization, business processes, and the external environment.
Consider economic and regulatory forces.
Key activities:
Major aspects:
Assessing Internal Controls.
Determine internal control efficiency.
Focus areas:
The elevated levels of control decrease the verification of transactions.
Fieldwork and Evidence Collection
Auditors conduct detailed substantive procedures to verify account balances and disclosures.
Methods used in the collection of evidence:
Audit opinion is pegged on gathered evidence.
Reporting and Recommendations
Reporting
Reporting is a procedure through which the team members obtain the highest quality information about the current state of matters.
Recommendations are a process by which the team members acquire the best information on the prevailing situation.
Auditor creates his/her independent report on fair presentation and compliance with the IFRS.
Opinions The unqualified, qualified, adverse, and disclaimer.
Additional outputs:
External audits have several advantages other than the essential regulatory compliance.
A company’s key decision-makers confirm that financial assessment is to be executed. Farahat and Co. have always encouraged consultation with their clients before the external audit process begins. It ensures that each client receives a focused audit service rather than a uniform approach.
Once the financial assessment scope is finalized, an engagement memo or letter is drafted to be signed by both parties, confirming that the party conducting the economical assessment is an independent audit firm. The engagement letter also includes the scope of the economical assessment and the period for which the economical assessment will be conducted. The economic assessment letter is then accepted by both parties by signing it off, provided all the terms are clearly stated in the engagement letter.
The most common economical assessment conducted during an external economical assessment are financial statements, operations, and compliance audits.
Examines the fairness and accuracy of the company’s economical statements and its compliance with the standard accounting principles. The external auditor must publicly issue a report on the health of the company’s financials, especially of publicly traded companies.
Examine the organization’s activity flow and if the performance aligns with the organization’s goals. The third-party audit will provide recommendations and an action plan for improvements to achieve maximum results from the company’s daily operations.
A compliance audit is to determine whether or not the company is following the standard procedures of rules and regulations, inclusive of the local laws and code of conduct.
The external auditor must ensure that the financial statements provided by the organization can be easily interpreted by the users, such that they are presented in a comprehensive yet reasonable manner. The economical assessment report mirrors the accurate picture of the company’s financials & operations and states the company’s actual financial health.
A typical external economical assessment attests to and confirms the fairness of the organization’s financial reporting. It also provides recommendations on the flaws and gaps in the accounting, compliance, and operating procedures. Therefore, the final economical assessment report submitted by the external auditor comprises various methodologies, recommendations, and opinions on improving internal control procedures of the organization.
An Adverse Opinion: This reflects a negative assessment of the company’s financial reporting and compliance. An adverse opinion indicates that numerous anomalies were found during the financial assessment, and the external auditor could not satisfactorily complete the audit due to operational or cash flow inaccuracies.
When selecting an audit firm in Dubai or the UAE, a business may have many concerns. However, with decades of expertise and Middle East business experience, Farahat and Co. are the leaders in statutory audits in Dubai.
Our multidisciplinary external account examiner are highly qualified Certified Public Accountants in Dubai and Chartered Accountants trained to work independently with organizations of every type in the UAE.
For executing your financial assessment plan, we ensure that a multidisciplinary team is in place that can understand complex transactions using the latest industry standards. We believe in tailored services and provide you with our subject matter experts, who have experience working in the UAE and the Middle East. Auditors on our team have experience with the Middle East and worldwide industry insights.
Farahat and Co. are on track with the latest digital technology and provide the correct exposure and the latest tools available. We are consistent with our approach, and our investment in technology helps our team to provide better insights into a company’s risks, failures, and opportunities. We invest in training our staff so they bring out their brightest self during third-party audit engagements.
Also Read: Free Zone Audit Services in Dubai, UAE
Farahat and Co. have been known for their undoubtedly accurate third-party audit methodologies and comprehensive understanding of businesses in the Middle East for several decades. We have always held the value of transparency in our economical assessment engagements through confident and accurate reporting on your business information.
Most Dubai businesses undergo external audits annually, as required by regulations and stakeholder expectations.
Yes, the annual external audit is compulsory in most companies such as all LLCs and PJSCs in the context of the UAE Commercial Companies Law.
Typically, 2–4 weeks for small entities, 4–8 weeks for medium entities, and longer for large or complex groups.
Yes. Professional audits improve credibility and financial transparency, helping SMEs access better funding.
The external audit services in Dubai play a crucial role in business development and compliance with the regulations. Select the certified auditors at Farahat & Co. who are qualified and appropriately licensed. Regular external audits help your business stay transparent, maintain FTA compliance, and remain competitive in Dubai’s market.