Assurance Services

Statutory Audit

Independent assurance on the true and fair view of financial statements, anchored in UAE law and FTA compliance

A Statutory Audit is a legally mandated, independent examination of an entity's financial statements, conducted in accordance with International Standards on Auditing (ISA). Its purpose is to provide reasonable assurance that the financial statements are free from material misstatement and present a true and fair view of the entity's financial position, performance, and cash flows. In the UAE, statutory audits have taken on heightened significance following the introduction of Corporate Tax, since audited financial statements now underpin both regulatory compliance and tax reporting obligations.

▌ WHAT A STATUTORY AUDIT COVERS

A statutory audit is broader than a routine bookkeeping check. It typically involves:

Independent appointment engagement of an external, licensed auditor with no operational involvement in the business
Substantive testing verification of revenue, expenses, assets, liabilities, and disclosures against supporting evidence
Internal control review assessment of whether controls over financial reporting are designed and operating effectively
Formal opinion issuance of an audit report expressing an unqualified, qualified, adverse, or disclaimer opinion
Compliance check confirmation that financial statements comply with IFRS and applicable UAE company law

▌ UAE AUDIT REQUIREMENTS

As per Ministerial Decision No. 82 of 2023, audited financial statements are mandatory for:

Taxable Persons entities with revenue exceeding AED 50 million during the relevant tax period
Qualifying Free Zone Persons (QFZPs) audited financial statements are required regardless of revenue, as a condition for accessing the 0% Corporate Tax rate on qualifying income
UAE mainland companies many free zone and commercial licensing authorities additionally mandate annual audited accounts for licence renewal

▌ CONSEQUENCES OF NON-COMPLIANCE

Administrative penalties the FTA imposes fines for late Corporate Tax registration, late filing, late payment, and inadequate record-keeping
Loss of tax benefits a Qualifying Free Zone Person that fails to maintain audited financial statements can lose eligibility for the 0% Corporate Tax rate for that period
Reassessment risk unaudited or poorly documented positions increase the risk of FTA reassessment, additional tax, and interest
Reputational impact non-compliance can affect banking relationships, investor confidence, and tender or licensing eligibility

▌ IMPORTANCE OF STATUTORY AUDIT

Enhances the credibility and reliability of financial statements
Supports Corporate Tax and broader regulatory compliance
Increases confidence among shareholders, lenders, and investors
Assists management in identifying financial reporting weaknesses early
Facilitates access to financing, credit lines, and investment opportunities
Provides a defensible position in the event of an FTA audit or dispute

▌ TYPICAL AUDIT PROCESS

1. Planning and Risk Assessment. understanding the business, industry, and regulatory environment while identifying key audit risk areas.

2. Audit Execution. examining financial records, transactions, and internal controls through detailed testing and verification procedures.

3. Evaluation and Reporting. assessing findings, forming a professional judgment, and issuing an audit report containing the auditor's opinion.

4. Follow-Up and Improvement. addressing identified issues and implementing recommendations to strengthen controls, records, and FTA-readiness.

Why It Matters

Statutory audits are no longer a once-a-year formality they are the backbone of Corporate Tax compliance in the UAE. A clean, well-documented audit gives regulators, the FTA, investors, and lenders confidence that an entity's financial statements are accurate and that its tax position is defensible, while protecting access to incentives such as the 0% Free Zone tax rate.