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An external audit is an independent examination of the financial statements prepared by the organization, It is usually conducted for statutory purposes. An audit results in an audit opinion about whether the financial statements give a 'true and fair' view of the:

  • State of affairs of the organisation and
  • Operations for the period

External auditors are accountants who work independently of a particular company. They examine company records and operations to ensure financial statements are accurate. External auditors are important to establishing your small business' credibility and to ensuring compliance with local & tax laws.

In UAE business environment, following are most common audits which organizations seek from independent auditors.

Audit for Authorities

Annual Audit is similar to a medical checkup, it not only diagnoses but also prevents the occurrence of problems. In UAE, generally audit report submission is not a mandatory requirement, however UAE free zones require companies to submit annual external audit. In these free zones, usually audited financials are required for license renewal purposes. The scenario may change with the implementation of VAT in UAE from Jan 2018.

Audit for Banks, RERA and Liquidation

Apart from audit for authorities, Banks also need Audited financial statements to extend credit facilities or loan to a business. Similar to free zones, RERA also requires submission of audit financial statements of owners' associations and developers. The third and most undesirable audit is conducted upon liquidation (closing) of a company which is required by DED/Free Zones to issue a closure certificate.

Audit for Owners/Partners/Investors

It is always recommended to get books of accounts audited, however business owners need an external audit to see how their business is doing, their assets are protected and business position. Further to it, owners or outgoing/incoming partners or investors' needs audited financial statements to claim their share or make an investment decision.

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