AUDIT AND ASSURANCE – MYTH, REALITY AND BEST PRACTICE
M/HQ has recently partnered with Re/think ME Accounting services and RAA Auditing to provide services to all of their clients. Although maintaining five years of accounting records and annual financial audits is a requirement throughout the UAE (including, in principle, free zones), some UAE jurisdictions have for the time being resolved to date not to systematically enforce the submission of the audit accounts, although they technically remain a requirement.
The below table highlights the jurisdictions that have opted to apply strict requirements as to annual auditing of the accounting books of their member entities.
Strict enforcement of annual audit requirements:
* For free zone establishment and free zone companies
** Not applicable to small and micro entities with annual revenue of less than AED 13.5M
[av_table purpose=’tabular’ pricing_table_design=’avia_pricing_default’ pricing_hidden_cells=” caption=” responsive_styling=’avia_responsive_table’] [av_row row_style=”][av_cell col_style=”]JURISDICTION[/av_cell][av_cell col_style=”]LEGAL REFERENCE[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]UAE Mainlands (LLCs and branches)[/av_cell][av_cell col_style=”]UAE Federal Law No.2 of 2015[/av_cell][/av_row] [/av_table]Other free zone jurisdictions have to date been more lenient in their enforcement of the federal requirements on their territory – or in the case of ADGM, created exemptions for small and micro entities. But it is anticipated that the implementation of stricter compliance standards across the UAE, coupled with the introduction of VAT, will result in most if not all jurisdiction to apply consistent standards – and request annual filing of audited accounts.
Jurisdictions where annual audit are required by law but not yet enforced:
[av_table purpose=’tabular’ pricing_table_design=’avia_pricing_default’ pricing_hidden_cells=” caption=” responsive_styling=’avia_responsive_table’] [av_row row_style=”][av_cell col_style=”]JURISDICTION[/av_cell][av_cell col_style=”]LEGAL REFERENCE[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Dubai Airport Free Zone (DAFZA)[/av_cell][av_cell col_style=”]Law No. 2 of 1996 applicable to DAFZA[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]TECOM (Dubai Internet city, media city & knowledge village) Free Zone[/av_cell][av_cell col_style=”]Law No. 1 of 2000 of the Emirate of Dubai applicable for entities in Dubai Technology, Electronic Commerce and Media Free Zone[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Media Zone Abu Dhabi (twofour54)[/av_cell][av_cell col_style=”]Decree Law No. 12 of 2007[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Ajman Free Zone[/av_cell][av_cell col_style=”]Emiri Decree No. 3 of 1996[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Fujairah Free Zone[/av_cell][av_cell col_style=”]Emiri Decree of 1987 issued on November 28[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]RAK Free Trade Zone[/av_cell][av_cell col_style=”]Emiri decree dated 1/5/2000 of H.H.Sheikh Saqr Bin Mohammed Bin Salem Al Qassimi, concerning the entities in RAK Free Zone[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]RAK Investment Authority (RAKIA)[/av_cell][av_cell col_style=”]Emiri Decree No. 2 of 2005[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Umm Al Quwain Free Trade Zone[/av_cell][av_cell col_style=”]Law No. 3 of 2014 applicable to UAQFTZ[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]Hamriya Free Zone[/av_cell][av_cell col_style=”]Emiri decree issued in November 2, 1995 for entities in Hamriyah Free Zone, Sharjah[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]JAFZA Offshore[/av_cell][av_cell col_style=”]Jebel Ali Free Zone Authority Offshore Companies Regulations 2003[/av_cell][/av_row] [av_row row_style=”][av_cell col_style=”]RAK ICC[/av_cell][av_cell col_style=”]The Ras Al Khaimah International Corporate Centre Business Companies Regulations 2016[/av_cell][/av_row] [/av_table]The law Articles 26 and 27 of Federal Law No.2 of 2015 applicable to Commercial Companies in United Arab Emirates provide as follows: “Every company shall have one or more auditors to audit the accounts of the company every year. Moreover, every company shall keep accounting records showing its transactions to reveal at any time the financial position of the company and enabling the partners or shareholders to confirm that the accounts of the company are properly kept with the provision of this law. Every company shall keep its accounting books in its head office for a period of at least 5 years from the end of the financial year of the company.”
Who we are and how we can help
M/HQ is a multi-service platform catering to a broad spectrum of clients, from successful individuals to established multinationals. The Firm’s offering is unique in the Middle East: a holistic and cross-disciplinary combination of a law firm’s specialist expertise and a market leading corporate services firm. We have extensive experience advising our clients on a broad range of wealth and tax structuring issues, including structuring of operational and non-operational assets, succession and legacy planning.
M/HQ has partnered with Re/think and RAA Auditing to form an even more unique business support platform. Through a combination of our teams’ versatile capabilities, we ensure that our clients understand the country’s ever changing legal, financial, tax and compliance requirements, and meet all of these requirements in a timely fashion.
RAA Auditing: internationally experienced auditors, able to perform required external audits, internal audits, and compliance audits.
Re/think ME: provision of annual or monthly accounting services, CFO services, and Finance Officer Designation through Experienced finance professionals, HR services, Due Diligence, and business plans, forecasts and presentations for capital raise or sale of companies.
Re/think ADGM: provision of compliance services to regulated firms in the DIFC and ADGM, as well as mainland. Advisory services to regulated entities, corporate service providers, large corporates, legal firms and government authorities.
Why RAA Auditing? M/HQ partners with a number of qualified audit partners operating domestically to service the needs of their clients. RAA Auditing is our main 3rd party audit partner. It has been chosen due to its key people’s international experience, client service focus and commitment to ethics in the field of audit. Its auditors will ensure that filing deadlines are met and that all audits are carried out in compliance with relevant statutory requirements and regulations, both local and international.
Who will assist you?
[av_one_half first]Yann Mrazek / Managing Partner M/HQ
Attorney-at-Law with 10 years of on the ground Middle-East experience. Multidimensional expertise and vast experience advising successful individuals and families with Middle Eastern exposure on structuring their operational assets and global wealth and on implementing intergenerational wealth transfer strategies.
E: mrazek@m-hq.com
Gregory Shippee / Managing Partner Re/think
Over sixteen years of corporate finance experience in the US, Europe, and Middle East & Africa regions. Multidimensional expertise and vast experience in strategy consulting, family office controlling, acquisition due diligence and financial planning, budgeting and control.
E: gregory.shippee@rethink-hq.com
