How to prepare for your annual audit in the UAE: a practical timetable

Start audit preparation at least eight to ten weeks before your filing deadline. Close the books, reconcile the main accounts, prepare schedules for assets, receivables, payables, payroll and VAT, and agree the timetable with your auditor. Late or incomplete information is the most common reason an audit runs past the deadline.

Start with the deadline

Work back from the date by which your audited statements are due. For free zone companies the date is set by the zone, and for tax purposes by the corporate tax return deadline. Check the zone's rule and your own financial year end. Then set internal dates: books closed, schedules complete, draft statements agreed, signing. See free zone audit requirements and corporate tax deadlines.

A suggested timetable

The document pack auditors ask for first

• Trial balance and the general ledger.
• Bank statements and bank confirmation letters, including loans and guarantees.
• Fixed asset register with purchases and disposals; see fixed assets and depreciation.
• Receivables and payables ageing lists.
• Stock count records and valuation; see inventory valuation and stock count.
• Payroll records, WPS files and end-of-service workings; see end of service gratuity.
• VAT returns and reconciliations; corporate tax computation.
• Contracts, loan agreements and leases.
• Board and shareholder minutes, and the register of members.
• Related-party list and balances.

Reconciliations to finish before the auditor arrives

1. Bank to ledger for every account.
2. VAT ledger to filed returns.
3. Payroll ledger to payroll reports.
4. Intercompany balances agreed with the counterparty.
5. Fixed asset register to the general ledger.

Causes of delay

• Unreconciled accounts or balances that nobody can explain.
• Missing contracts or invoices for large transactions.
• A change in finance staff during the audit.
• Unaudited prior year numbers that need to be restated.
• Waiting for related-party confirmations.

Cost and fees

Fees depend on size, complexity and the quality of your records. Clean records and a ready pack lower the time the auditor spends and so the fee. See audit cost in Dubai. If your current auditor is not right for your zone or deadline, read changing your auditor.

After sign-off

Keep the signed statements and the audit file reference. Submit them to the zone or authority if required and use them to support the tax return. Read the report and the management letter; see how to read a UAE audit report.

The first week

Confirm the audit scope in writing: the entity, the period, the framework and the reporting deadline. Send the auditor the prior-year signed statements and the permanent file: licence, memorandum, shareholder register and key contracts. Appoint one finance contact as the single point of coordination. Auditors lose days when requests go to several people and answers come back by different routes.

Handling auditor queries

• Keep a log of every request, with a date requested and a date sent.
• Answer in the order of priority the auditor sets.
• Provide evidence in a folder structure that mirrors the trial balance.
• Explain, in two lines, unusual movements before they ask.

Management representations and the letter

Before signing, the auditor asks management to confirm in writing that it has provided all records and disclosed all known matters, such as related parties, litigation and subsequent events. Read the letter carefully, and make sure what you sign is accurate. After the audit, the auditor may issue a management letter with control observations. Keep a response and a plan with dates. See how to read a UAE audit report.

Events after the year end

Tell the auditor about events between the year end and the signing date that affect the statements, such as loan changes, large customer losses, restructurings or new contracts. Late disclosure of a material event can delay sign-off and may require changes to the statements.

Connect the audit to the tax return

Use the signed statements as the base for the corporate tax computation, and file the return before the deadline. Check that VAT figures agree with the accounts and that any differences are explained. See VAT and corporate tax turnover mismatch.

For small and owner-managed companies

A small company can keep the audit simple by doing five things in the quarter before the year end: reconcile the bank and the VAT account, update the fixed asset register, agree the stock count date, collect confirmations of loans and guarantees and list related-party transactions. If these five items are in order, most auditor queries can be answered from files that already exist.

Working remotely with the auditor

Many audits now run mostly through shared folders and video calls. Organise documents by trial balance line, name files clearly, and give the auditor read access to the accounting system if you are comfortable doing so. Agree a channel for queries so they are not lost in email threads. Scanned originals are fine for most evidence, but keep the originals available.

Signing and filing

Once the statements are final, the directors or owners sign, and the auditor issues the report. The company then files or submits the statements where required and keeps copies for the retention period. See tax record retention. Put a reminder in the calendar for next year's start date while the experience is fresh.

Frequently asked questions