External auditing is a key requirement in the UAE, especially for businesses operated as LLCs either in the mainland or in a Free Zone. The process ensures compliance with UAE laws, promotes financial transparency within the organization, and enhances credibility with its regulators, banks and investors.
The article explains the different stages of external audit process in the UAE, the legal requirements, and the role of auditors.
An external audit is a review of a company’s financial records by an independent auditor. The goal is to check if the financial statements are correct and follow international standards and UAE laws. External audits are required for most companies in UAE, including mainland and free zone businesses.
The external audit procedure in the UAE has a well-defined structure. Every step in the audit enables the auditor to know the financial standing of the company and prepare a report.
At this stage the company appoints a licensed auditor. The auditor then plans an audit. This plan would contain the scope of work, timelines, and the points of concern. The auditor would also review history reports and accounting policies.
An auditor reviews the business model, internal controls, and financial systems of the company. This serves to outline where errors or fraud can happen. Auditors might have interviews with management and/or review documents.
The auditor identifies risks that may affect the accuracy of financial statements. This includes assessing potential risks that may arise from errors, fraud, or uncertainty. Subsequently, the auditor determines, based on their risk assessment, the areas that need more attention.
The auditor examines financial records, invoices, bank statements, etc. The auditor can also conduct sampling of transactions and interview staff. The objective is to obtain sufficient evidence to substantiate the findings of the audit.
The auditor reviews all data, making comparisons with the financial statements for differences, errors, or omissions. If found necessary, the auditor requests further clarifications from the company.
An audit report is prepared by the auditor. The report expresses an opinion as to whether the financial statements are free of material misstatements. There are four opinions: unqualified, qualified, adverse, and disclaimer. Unqualified means everything is alright.
The final report is given to the company. If required, the report is filed with the relevant UAE authorities, like the Ministry of Economy or the free zone regulators. The company may need to take action based on the auditor’s advice.
The purpose of an external audit is to ensure that the company maintains both correct financial records and follows all UAE financial regulations. The process of financial reporting helps companies establish trust with their investors, banking institutions and public authorities.
The auditor reviews financial records, checks for errors, and prepares a report. The auditors may visit the company, meet with employees and perform transaction testing.
An independent and objective examination carried out by professional licensed auditors for the purpose of evaluating the accuracy of financial statements.
Pros: Creates trust, creates compliance, and creates risk awareness.
Cons: Costly, time-consuming, requires documentation.
The main objective of an external audit is to confirm that the financial statements are free from any material misstatement, compliant with laws and accounting standards.
Only auditors licensed by the UAE Ministry of Economy or approved by free zone authorities can perform external audits.
The audit costs will depend on the size of the company involved, the required type of audit, and the complexity of the operations. External auditors must be licensed by the UAE Ministry of Economy or approved Free Zone authorities. Businesses are advised to request a formal quotation from licensed audit firms, depending on specific needs for accurate pricing.
Yes. UAE law under Federal Law No. 32 of 2021 requires all LLC companies to prepare audited financial statements every year.
FAR Consulting Middle East has been licensed as an approved audit firm by the Ministry of Economy in the UAE, and recognized by free zone authorities. Our team serves businesses across the UAE by providing expert external audit services. We prepare your financial records, appoint licensed auditors, and meet all legal and free zone requirements.
We support the audit in the following areas:
If you need help with audit compliance, FAR Consulting Middle East is ready to assist. Our experience with UAE audit laws and financial regulations makes us a trusted partner for companies of all sizes. Our consultants will support your business through complete audit assistance when you require dependable audit services.
Contact us today to arrange an audit consultation which will guarantee full compliance with UAE regulatory requirements.