The Need of Audits in UAE Free Zones:
Audit itself connotes a panic among the people because it’s meaning itself is defined in terms of investigation, examination or evaluation. Most of the people don’t intend to be screened, scrutinized, examined or investigated even if they have no legitimate reasons to fear so.
Most of the organizations prefer to do an audit as it helps to determine how effectively and efficiently the organization is functioning. It also helps a business organization to comply with rules and regulations stipulated by authorities, to have an equal playing field for all similar businesses or to have the best business practices. Simply put, an audit is the foundation of good governance in any business.
UAE Free Zones : The facts
UAE Free Zones : There is a misconception among certain people that the requirement of audit or submission of audit reports to any authority leads to levy of tax or any other pecuniary controls. Certainly, in countries where direct taxation is prevalent, audits and reports are mandatory or form part of their fiscal tax procedures.
But in countries like United Arab Emirates (UAE) where there’s no levy of taxation of income, certainly one may feel that there’s no need for audit or audit reports. But in countries like UAE, where the free zones play a dynamic role in formulating and sustaining a more robust social and economic development; guide the country to maintain placid growth and housing various types of industries and diversified businesses, it is imperative to have a proper system in place to guide and discipline the member organisations functioning in the free zones. Hence most of the UAE Free Zones have made it mandatory that the companies under its control have to submit annual financial statements and independent auditors report at the end of each accounting year prior to renewal of their trade licences.
At least some may feel that this is an infringement of their business privacy and secrets. In reality that’s not the case. An auditor, who is performing the audits, is a professional who by the nature and standards of his qualifications and ethics shall maintain the secret nature of his clients business, interests and results. Also the authorities to whom the reports are submitted are also responsible professionals who shall not in any circumstances deliver the information to any unscrupulous agents. Certainly, the authorities have the mechanism to maintain the secret nature of all the data in their safekeeping.
The authorities also have the right to know if the companies or organisations under their jurisdiction comply the stipulated rules and regulations and the organisations are following the best business practices. The organisations also are at liberty to collate and consolidate the data for statistical purposes for evaluating the growth, GDP etc., of the Free Zones and the country as a whole.
Also most of the Free Zones have stipulations that they allow only performing companies under their licences and hence by law stipulates that all companies have to maintain net assets in excess of 75% of their share capital.
Hence, in view of all the above, the requirement of annual audit reports in the UAE Free Zones can be substantiated and shall be viewed as a very positive step by the authorities for the growth and betterment of the organisations and the society as a whole.
UAE Free Zones : The professional auditors
Saif Chartered Accountants operating since 1999, in UAE has a prominent presence in all the UAE Free Zones. It provides various services to its diversified clientele in areas of financial audits, business advisory, and other non-assurance services.
Contact us :Business Bay, Sheikh Zayed Road, Dubai, UAE. Tel: +971 4 4518600, Fax : +971 4 4518599
Mob: +971 50 8550 765, +971 50 675 9158 Mail: firstname.lastname@example.org, www.www.saifaudit.com
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