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.

Frequently Asked Questions

Under Ministerial Decision No. 82 of 2023, Taxable Persons with revenue exceeding AED 50 million during the tax period must maintain audited financial statements, as must all Qualifying Free Zone Persons regardless of revenue.

It is a free zone entity that meets the conditions to benefit from the UAE's 0% Corporate Tax rate on qualifying income. Maintaining audited financial statements is a specific condition for retaining that 0% rate, regardless of revenue size.

Once revenue exceeds AED 50 million during a tax period, the entity falls within the category of Taxable Persons required to maintain audited financial statements under Ministerial Decision No. 82 of 2023.

Financial free zones with their own regulators generally layer their own reporting and audit requirements on top of federal Corporate Tax rules, so requirements can vary by free zone.

Many mainland licensing authorities require audited accounts as a condition of annual licence renewal, independent of the Corporate Tax revenue threshold.

Statutory audits are conducted in accordance with International Standards on Auditing (ISA), with financial statements assessed for compliance with IFRS and applicable UAE company law.

Non compliance can result in administrative penalties from the Federal Tax Authority, loss of eligibility for the 0% Free Zone Corporate Tax rate, increased reassessment risk, and reputational impact on banking relationships.

It covers substantive testing of transactions and balances, review of internal controls, verification of compliance with IFRS and UAE company law, and issuance of a formal audit opinion.

It is the auditor's formal, independent conclusion on whether the financial statements give a true and fair view of the entity's financial position, based on evidence gathered during the audit.

Audited financial statements are often requested by banks as part of credit assessments and ongoing relationship management, and gaps in compliance can have a reputational impact on those relationships.

Yes, businesses can change auditors, though continuity often helps efficiency since a new auditor typically needs to build up familiarity with the entity's operations and history.

Auditors typically require the general ledger, trial balance, bank statements, contracts, supporting schedules, and prior year financial statements.

Statutory Audit

What A Statutory Audit Covers

UAE Audit Requirements

Consequences of Non Compliance

Importance Of Statutory Audit

Typical Audit Process

Frequently Asked Questions

Strategic Partners

Insights On Tax & Audit

Ready to establish your legacy?

Statutory Audit

What A Statutory Audit Covers

UAE Audit Requirements

Consequences of Non Compliance

Importance Of Statutory Audit

Typical Audit Process

Frequently Asked Questions

Who is legally required to have a statutory audit in the UAE?

What is a Qualifying Free Zone Person and why does audit matter for them?

What happens once our revenue crosses AED 50 million?

Do free zone entities outside the standard free zone regime have different audit requirements?

Do mainland companies need audited financials even without a revenue threshold?

Which standards govern a statutory audit in the UAE?

What are the consequences of not complying with statutory audit requirements?

What does a statutory audit actually involve?

What is an auditor's opinion?

How does a statutory audit affect our relationship with banks?

Can a company change its statutory auditor from year to year?

What records are needed to complete a statutory audit efficiently?

Strategic Partners

Insights On Tax & Audit

Ready to establish your legacy?