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Free Zone Audit

Free Zone Audit

An audit of Free Zone Companies entails a thorough evaluation and analysis of financial statements and records under Corporate Tax UAE. The primary objective is to ensure strict compliance with accounting standards and regulations established by the respective free zone authority. Achieving accuracy, dependability, and conformity with norms is what the audit process guarantees to stakeholders about the financial accounts. The audit is usually performed by an authorized auditor or an audit company chosen by the UAE Free Zone authorities.

What Are The Essentials of   Audits In  Free Zone, UAE?

Companies registered in UAE free zones and having a trade license issued by the free zone authority are required to comply with specific audit requirements as mentioned below:-

  • General Accounting Principles: IFRS (International Financial Reporting Standards) are followed while preparing the audited financial statement that further attests to the company's compliance with accounting principles generally recognized, 
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Why Threshold/Turnover For Audit is important?

The taxable entity will come in the ambit of audit in case taxable income is 50 M or above as per the Ministerial Decision No. 82/2023 for UAE Corporate Tax Law. The above-cited decision deals with the Revenue Threshold. It may be pertinent to mention that in case a company surpasses a predetermined turnover threshold i.e. 50M AED, it triggers the audit requirement. Some of the key features are stated below:-

  • The threshold taxable income of a company is AED 50M or above making it mandatory to prepare Audited financial statements by maintaining records.
  • Each free zone authority has a set threshold limit that governs and influences the turnover degree.
  • Qualifying Free Zone Persons must prepare their Audited financial statements by maintaining records regardless of revenue of 50M AED, they fall under this requirement.
  • The Federal Tax Authority may conduct audits for other Taxable Persons if needed.

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How Employee Count Is Significant For Audit?

Threshold of taxable income, Qualifying Free zone person status, the companies may be subject to an audit if they have employed a specific number of workers to ensure financial discipline and accountability as the company scales and grows.

Who Are The UAE Free Zone Approved Auditors For Companies Audit?

The audits can be conducted by top audit firms in Dubai and professionals who are certified by the competent authorities including DMCC, DAFZA, SAIF Zone, IFZA, Shams Zone, DWC, Dubai World Trade Centre, and others in the United Arab Emirates, Approved auditors are firms or individuals with certification who legally conduct audits of free zone companies. The audits are restricted to approved auditors to make sure that the financial records of the companies are carefully reviewed in compliance with UAE tax laws and regulations, these approved auditors are essential for the audit procedures and for license renewal. The audit process enhances the reputation of the company and adherence to the strictest financial probity laws.

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Functions Performed by Approved Auditors In Free Zone Companies Audit in UAE

For the accuracy of financial records and accounts of the taxable person, the UAE free zones approved auditors are essential. Approved auditors carefully go over and inspect the financial records of the company, taxable entities must maintain financial records by complying with the accounting rules and guidelines set by the free zone authorities.

  • Issuance of Audit Reports: After the complete review and document inspection, the auditors issue thorough audit reports. These reports serve as a testament to stakeholders, assuring them of the reliability and accuracy of the financial data presented.
  • Assessment and Recommendations:- The approved auditors not only evaluate the company’s financial records but also assess the overall financial health of the free zone companies. They identify errors and inconsistencies diligently. Approved auditors try to find out areas for improvement, by recommending courses of action to reduce risks.

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