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Introduction to Auditing in Mainland Dubai:

Auditing Services for Mainland Companies is essential. Federal Law No. 32 of 2021 has been introduced to administer commercial companies by way of mandatory auditing of financial records and statements for companies operating in mainland Dubai. This decree has led to a significant shift in the regulatory landscape for businesses operating in the United Arab Emirates (UAE). As per this law, it is necessary for companies to engage a licensed auditor for the examination of their financial records and statements. Because of this measure, it enhances transparency, detects fraud and errors, ensures compliance with regulations, and improves operational efficiency for Mainland Company Formation in Dubai.

Types Of Auditing

Internal auditing:

 Internal auditors who work for the organisation carry out internal audits. Assessing and enhancing the efficacy of the governance, control, and risk administration procedures is the primary objective. Financial controls, operational procedures, policy and procedure compliance, and risk management techniques constitute some of the topics that internal audits concentrate on. Internal audits aid businesses with discovering gaps, enhancing internal controls, detecting fraud or mistakes, ensuring regulatory compliance, and boosting operational effectiveness.

External auditing:

 Independent external auditors who have no connection to the organisation conduct external audits. Providing an impartial evaluation of the accuracy and fairness of financial accounts is the key objective. To ensure compliance with the law, norms in the industry, and accounting standards, external audits emphasise examining financial records, transactions, and reporting procedures. External audits provide stakeholders—including creditors, investors, and regulators—assurance in the veracity and reliability of the financial data that the enterprise presents.

Tax Auditing:

The goal of tax auditing is to confirm that tax rules and regulations are being enforced by looking through tax-related documents, transactions, and filings. The scope of tax audits involves examining income tax, value-added tax (VAT), withholding taxes, customs charges, and other issues related to taxes. Tax audits assist businesses by lowering their tax obligations, seeing opportunities for tax planning, managing tax risks, and abiding by reporting regulations.

Forensic auditing:

The main purpose of forensic auditing is to detect frauds, misconducts, or any deviations by looking into and examining financial data and transactions. Various financial crimes for instance embezzlement, money laundering, corruption, and fraudulent operations are the main targets of forensic audits. Forensic audits help companies in recognizing and preventing frauds, gathering information for litigation, securing assets, and upholding integrity and openness in their business transactions.

Compliance auditing:

 The goal of compliance auditing is to make sure that a company adheres to its internal guidelines, norms, rules, and regulations. Compliance audits assess an array of domains, including data privacy, specific to industry standards, tax, regulatory, and ecological compliance. The benefits of compliance audits involve minimising compliance risks, reducing legal implications, enhancing internal controls, and ensuring accountability to authorities and stakeholders.

Special-purpose audits:

These types of audits are subject-specific audits conducted for specified purposes. These include technical audits like environmental audits, information technology audits, procurement audits, and narrowly focused transaction levels like forensic audits and fraud investigations. These audits are subsequently reported by the auditor general to respond to specific requests from the country assembly. 

Regulatory Framework

In order to maintain responsibility and confidence in the corporate environment, mainland Dubai’s regulatory system works to protect the accuracy, dependability, and integrity of financial reporting and auditing procedures. It is imperative that audit firms, auditors, and corporations operating in mainland Dubai adhere to these legislation and norms.

  • Federal law no. 32 of 2021, chapter 2, article 27:

As per the new commercial dubai law, federal law no. 32 of 2021, chapter 2, article 27, every joint stock company or limited liability company shall appoint one or more auditors to audit financial statements and records of the company on a year to year basis.

  • Auditor’s department (Ministry Of Economy)

The Auditor’s Department in the ministry of economy grants and renews licence to practise the profession of accounting and auditing for auditing firms and their auditors. It is responsible for ensuring their compliance with legislation governing the profession of auditors, auditing and professional performance standards. It also conducts inspections to monitor adherence with professional standards.

  • The UAE Audit Oversight Board (AOB)

The UAE Audit Oversight Board (AOB) is an independent regulatory authority that is responsible for overseeing auditing practices of audit firms to ensure and promote accuracy, transparency and quality in auditing practices. They conduct scrutiny, analyse audit reports and execute applicable standards such as international standards on auditing (ISA) and other applicable standards.

  • International Standards on Auditing (ISA)

 The international auditing and assurance standard board (ISAAB) has issued guidelines known as International Standards on Auditing (ISA). Companies incorporated and established in the Dubai mainland are required to adhere to these standards. They provide guidelines for audit planning, execution, reporting and quality control to ensure consistency and reliability in auditing practices

  • Dubai chamber of commerce and industries (DCCI)

The dubai chamber of commerce and industries provides resources, training and networking opportunities to audit professionals, firms and stakeholders. This plays a key role in promoting the best practices in financial reporting and auditing among its member corporations in mainland dubai.

  • Dubai financial service authority

The Dubai Financial Services Authority (DFSA) establishes guidelines and requirements for auditors and audit companies that work inside the DIFC’s jurisdiction, even though its primary focus is on financial services in the DIFC.

Its standards might be in line with global best practices and have an impact on mainland Dubai’s auditing procedures, particularly for businesses that do cross-border operations.

  • Local Professional Bodies

Professional associations like the Association of Chartered Certified Accountants (ACCA), the Institute of Chartered Accountants of the United Arab Emirates (ICAEW), and others are involved in establishing ethical standards, offering training, and encouraging ethical behaviour among audit professionals.

Auditing Process:

Step 1: Planning

The auditor shall gather all information by reviewing the previous year’s audit completed in the appropriate field and researching specially designed literature. He meets with the company’s management to discuss audit objectives, scope, and timelines.

Step 2: Fieldwork

In this phase, auditors perform onsite visits to the client’s premises to conduct audit procedures, gather evidence, and observe operations firsthand. They also carry out necessary tests and carry out interviews with departmental employees.

Step 3: Reporting

A report summarising audit findings shall be drafted by the auditors conducting the audit. It shall also mention areas of concern and suggest improvements

Step 4: Communication and follow-up

Management and the board of directors shall respond to audit findings and take corrective actions, improve compliance and operational efficiency. Auditors shall follow up to ensure recommendations are implemented.

Roles and Responsibilities:

Auditors

They are either independent professionals or partners in audit firms. They examine and evaluate the financial records, books of accounts, financial statements, internal controls to investigate whether they adhere to rules, regulations, accounting standards and other requirements of an auditee.

Following are the primary responsibilities of auditors:

  • Conduct audit procedures as per stipulated accounting standards, rules and regulations.
  • Assess the potential risk of misstating the material facts in the financial records and statements
  • Evaluate internal controls and procedures.
  • Communicating findings during the audit and giving opinions in the audit report prepared.
  • Maintaining ethical behaviour, objectivity and professional scepticism during the audit process.

Auditees

The entities or organisations who are being audited which can include any company, government agencies, not for profit organisations or any other body are known as auditees.

Below are the responsibilities of auditees:

  • Provide access to relevant financial records, documents and information as requested by auditors
  • Cooperate with auditors and address audit queries promptly during the audit process
  • Put into effects the recommendations and corrective actions found during the audit process to improve financial reporting and internal controls.
  • Maintain limpidity and integrity in the financial reporting system.

Audit Committees:

These types of audit committees are generally part of the governance structure of an organisation. The audit committee generally oversees the financial reporting process, internal controls, and interaction with auditors.

The responsibilities of audit committees are as follows:

  • Review and approve the external auditors
  • Monitor the process of auditing
  • Review findings and suggestions concluded from audit process
  • Make sure the adherence with regulatory requirements and ethical standards
  • Providing oversight of risk management and internal control systems.

Regulatory bodies:

The Ministry of Economy (MOE) and the UAE Audit Oversight Board are the regulatory bodies in the UAE that oversee audit firms and professionals, making sure compliance with audit standards, regulations, ethics and code of conduct.

Their main responsibilities are given below:

  • Establishing and enforcing audit standards and regulations.
  • Conducting inspections and reviews of audit firms.
  • Promoting transparency, reliability and credibility in financial reporting

The fundamental principles in auditing that contribute to the credibility and reliability of the auditing process are independence, objectivity and professional ethics.

  • Independence: The first basic principle is that auditors must be independent from the auditee enterprise in order to maintain impartiality and avoid conflict of interest. This makes sure that audit reports and opinions in the report are unbiased and solely based on audit evidence and professional judgements.
  • Objectivity: Auditors should not allow their personal biases, relationships or external influences to trade off their professional judgements, decisions or opinions and maintain the integrity of the audit. They must maintain this objectivity throughout the audit process.
  • Professional Ethics: There are certain professional ethics, standards and principles which must be adhered by the auditors to uphold trust and confidence in the auditing profession. These principles includes integrity, confidentiality, professional competence and due diligence while performing the audit procedures and reporting audit findings accurately.

Benefits of Auditing:

Avyanco Auditing LLC  is a highly regarded firm engrossed in providing high-quality services such as auditing, assurance, bookkeeping, etc. We adhere to International standards for auditing while preparing comprehensive audit reports, and inspecting, analysing, and detecting any possible errors. Our proficient auditors use pioneering methods to ensure the accuracy of the entity’s financial information. This alleviates the needs of modern-day business in the following ways:

  • Lowers the associated risks by adhering to rules and regulations
  • Abide with the latest amendments in statutes and accounting standards.
  • Enhances stakeholder’s degree of confidence in financial statements.
  • Identifies any potential threats by conducting a comprehensive risk assessment
  • Ensure legal compliance and due diligence
  • Pitch into effective decision-making.

Challenges and Considerations:

Dubai has a wide diaspora of foreign nationals which has created a number of challenges related to cultural differences, language barriers and regulatory complexities. 

  • Business practices and cultural norms in Dubai are different from other parts of the world. Because of these differences, potential misunderstandings and misinterpretations may be caused during the audit process. 
  • diverse languages are spoken all across dubai as it is a multicultural hub. This creates language barriers which can impede effective communication and comprehension during audits. 
  • Regulatory landscape of Dubai is constantly evolving with new laws, regulations and compliance requirements. This can create complexities which the auditor must navigate through during audits.
  • Dubai’s business environment is always changing with rapid technological advancements and digital transformation. Auditors are required to adapt to these rapid changes and leverage technologies effectively in audits.
  • Adequately staffing and resourcing audits, especially during peak periods or when dealing with complex entities, can be a challenge in Dubai’s competitive market.

Strategies to overcome these challenges

  • Conduct cultural awareness seminars and training programmes for audit terms and help them to understand local culture, practices, communication style and etiquettes.
  • For facilitating smoother audit interactions, build relationships with local stakeholders and empathetic towards cultural nuances
  • Arabic and English languages can be used as primary language in businesses and documentation with regulatory authorities. To make this possible, hire bilingual auditors and interpreters proficient in both arabic and english language.
  • Ensure translated documents are accurate and accessible to all stakeholders and parties involved in the audit process.
  • Collaborate closely with legal experts and regulatory advisors in order to stay up to date about latest amendments in laws, regulations and standards comply with these changes accordingly
  • Invest in the latest audit softwares and tools to enhance efficiency, accuracy and data analytics capabilities.
  • Train audit teams with latest technologies in order to enhance efficiency, improve audit effectiveness and identification of potential risks more efficiently and effectively.
  • Development of resource allocation strategy considering various factors such as workload distribution, skill set required for special audit purposes, and contingency plans for unexpected challenges and roadblocks.

Auditing Standards and Practices:

Auditing standards in mainland Dubai adhere to the international standards. This ensures accuracy, transparency and compliance with legislation. Auditing standards in mainland Dubai align with International Standards on Auditing (ISA) issued by International Auditing and Assurance Standard Board (ISAAB). Guidelines regarding the conduct of an audit and the issuance of audit reports are provided by these standards. This profession of audit and assurance in mainland Dubai is regulated by the Ministry of Economy and the UAE Audit Oversight Board (AOB). The role of these regulatory bodies is to register auditing firms and provide licenses to practice auditing. The practitioners are required to hold required qualifications and certifications such as Chartered accountant (CA), certified public accountant (CPA) or any certification equivalent to these and conform to code of conduct and ethics set up by these professional bodies. The regulatory bodies not only register these audit firms but also are responsible for supervising audit firms and ensuring they adhere to rules, regulations, professional standards and ethical guidelines. Audit professionals in mainland dubai are encouraged to take part in training and development programs to stay updated with latest amendments in rules, regulations, standards and industry practices.

Why Avyanco Auditing LLC?

The experienced team of auditors at Avyanco Auditing LLC with acute insights into industry-specific laws and best practices offers a strategic approach to auditing benefiting the organisation and ensuring minimal regulatory risks. Our promise of quality and accuracy assures audit findings are reliable and trustworthy.

Here are reasons why you must engage us for auditing services:

  • Register from anywhere
  • Best in knowledge and support
  • Transparent fee and pricing
  • Experienced chartered accountants (CA)
  • Client first approach
  • Constant upgradation in terms of innovation
  • Value-adding strategic insights
  • Customised opinions and explanations delivering value and long-term success

Team Expertise 

Mr Jashvantkumar Prajapati is the founder and CEO of Avyanco Group of Companies. He has gained recognition as a leading business personality in the United Arab Emirates thanks to his vast industry knowledge and broad range of business consulting skills, which he uses to support SMEs on their entrepreneurial journeys. With a diversified portfolio and core competencies in investment management, business consulting, business planning, market research, and other operational business domains, he hopes to assist prospective clients and investors in establishing their businesses in rapidly developing economies such as the Middle East and North Africa (MENA). In order to help committed investors with the necessary company formation procedures in Dubai, he launched Avyanco Auditing LLC, which quickly established itself as the most reputable company setup consultancy in the UAE, assisting investors in increasing profitability thanks to his extensive industry experience and skills.

Our team in action:

We are proud to have a team of competent and skillful experts committed to bringing innovative ideas and solutions to the table with exceptional service to our clients. With a wide range of expertise and knowledge, our team collaboratively works on tackling complex challenges and driving positive outcomes from our clients.

Contact Avyanco Auditing LLC 

Choose the best auditing services offered by Avyanco Auditing LLC to transform your company. To guarantee compliance, optimise processes, and boost business performance, our knowledgeable staff contributes unmatched industry knowledge and strategic insights, Select Avyanco Tax, Accounting & Auditing for dependable, value-added auditing services catered to your unique requirements. To book a consultation, contact us today.

Frequently Asked Questions

What is the purpose of auditing in a free zone?

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