The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. By thoroughly examining a company’s processes, internal audits highlight areas that add value, improve efficiency, and ensure compliance with policies and regulations.
Unlike external audits, Internal audits can be conducted by an in-house team or outsourced to specialized professional firms (Co-sourcing/Outsourcing) to ensure complete objectivity. While voluntary for some private SMEs, Internal Audit is mandatory for Public Joint Stock Companies (PJSCs), licensed financial institutions, and companies regulated by the SCA or DFSA.
Here are a number of instances when a company performs an internal audit:
While an internal audit can investigate recognized control weaknesses, it is primarily a proactive activity designed to prevent discrepancies before they occur. Correcting discrepancies promptly is essential for maintaining regulatory compliance and financial accuracy.
- It is advisable to perform an internal audit before seeking funding or a commercial loan. Investors and financial institutions will require reliable financial statements; ensuring their accuracy via an internal audit can significantly strengthen your funding application.
- It's a perfect time to conduct an internal audit in Dubai when there is a profitability problem within the organization. If the organization is facing declining profit margins or operational inefficiencies, an internal audit can identify cost-saving opportunities.
- Regular internal audits are highly recommended for your organization. Instead of waiting for a specific event to necessitate an audit, conducting audits at normal intervals (e.g., quarterly or annually) helps maintain high operational standards.
If you want to evaluate your management systems to determine if processes and objectives are in alignment with company policies and regulatory compliance, you can do this quarterly or twice a year.
Infrequent internal audits increase exposure to operational, financial, and cybersecurity risks, as well as non-compliance penalties under the UAE AML/CFT framework. Once the auditing procedures are lax, it may result in an incident that affects management personnel and staff morale. It will be difficult to restore previous production processes to full capacity since there is a higher likelihood that problems will escalate to levels that will seriously harm the firm.
How to Prepare for a Successful Internal Audit
Follow these tips to ensure your internal audit runs smoothly:
- Gather all necessary documents: Prepare agreements, policies, procedures, incident reports, and self-assessment questionnaires.
- Set clear audit goals: Define what you want to achieve, so everyone understands their role and responsibilities.
- Establish strict policy standards: Ensure company policies support auditors in performing unbiased reviews without fear of retaliation.
- Coordinate internal and external audit functions: Effective internal auditing ensures your organization maintains ongoing compliance with UAE Corporate Tax and VAT laws, making the year-end external audit process seamless.
Auditing gives you a distinct view of your firm’s internal controls, the complete accounting process within the company, and the ability to examine all data, including operational workflows, IT security protocols, and financial transactions, to evaluate the organization's risk management framework. The importance of internal audit lies in its ability to detect discrepancies early and strengthen the company’s internal control system. Audits must be conducted regularly to know the firm’s financial condition, and they also give the company a chance to foresee its future financial condition. If audits are not performed regularly, the mistakes keep piling up and could even lead to the closure of the company. Therefore, internal audit for businesses is not just a compliance measure but a proactive approach to financial health. So, regularly conduct your internal and external audits and keep a healthy financial status. To navigate the complexities of UAE's evolving regulatory landscape, partnering with an accredited auditing and assurance firm is essential for maintaining a resilient risk management framework.
Get Professional Auditing and Assurance Services in the UAE
Partnering with an expert audit and assurance firm can help you maintain compliance, manage risks, and make informed business decisions.
Reyson Badger, one of the leading accounting and auditing firms in the UAE, provides top-notch internal auditing, external auditing, bookkeeping, accounting, and corporate tax services. Our experienced professionals help businesses of all sizes maintain accurate records and meet regulatory requirements.
If you’re looking for a reputable accounting and auditing firm in the UAE, Reyson Badger is your trusted partner.
