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Enhancing Audit Quality through
effective application of Auditing Standards
Auditors in DIFC for External Audit and DIFC Company Liquidation
If you are looking for an approved Audit Firmin DIFC then look no further as our Audit Firm, Nadeem and Umendra Chartered Accountants, can provide audit servicesto you as an independent external auditing firm. We are licensed and approved in the UAE mainlandas well as registered with DIFC and free zones like DAFZA, JAFZA, DMCC, DSO etc. Wework to provide assurance to shareholders and stakeholders that your business is run efficiently and in full compliance with the applicable laws and regulations.
Our audit process is streamlined and designed in a manner that displayscompliance with all the applicable accounting and auditing standards. We are also registered with all the major banks and financial institutions in the UAE.
Dubai International Financial Centre (DIFC):
Dubai International Financial Centre (DIFC) is a financial free zone established within the emirate of Dubai in the year 2004. DIFC is an onshore financial centre, providing financial institutions with a secure economic platform to operate from within the Middle East region and to extend their reach to emerging markets in other parts of the world. The DIFC is seen as a bridge between financial centers/markets in the east and the west.
DIFC is recognized as an autonomous jurisdiction within the UAE. Businesses operating within the DIFC are generally exempt from all the federal laws of the UAE except the ones related to administration and anti-money laundering and criminal offenses. The DIFC has its own set of laws and regulations dealing with civil and commercial issues which businesses operating within the centre are required to show compliance with in order to continue operating from and within the DIFC free zone.
Who Regulates the DIFC Free Zone?
There are three separate independent bodies that are responsible for regulating the environment within the DIFC and these include the DIFC Authority (DIFCA), the Dubai Financial Services Authority (DFSA) and the DIFC Judicial Authority. The DIFCA oversees the operation and administration part of the financial centre in addition to developing laws and regulations that are not related to financial services.
On the other side, the DFSA is responsible for developing laws and regulations related with authorization, licensing and registration of businesses providing financial services and engaging in related activities within the DIFC free zone. Businesses wanting to provide financial services in the DIFC are subject to authorization and approval by the DFSA.
DFSA is responsible for ensuring that businesses and individuals operating within the DIFC comply with the applicable laws and regulations.
DIFC Free Zone – Types of business Entities
The businesses that want to operate from or within the DIFC are first required to obtain a business license subject to approval from the DIFC Authority and the DFSA. Following are the types of businesses that can beformed within the DIFC:
Company Limited by shares: Minimum number of shareholders is one and there is no maximum shareholders requirement. There are no minimum capital requirements except for companies providing specific financial services.
Limited Liability Company (LLC): These are incorporated under Law No. 3 of 2006 – Companies Law. Theformation process is identical to that of a company limited by shares. A LLCis required to add ‘Limited Liability Company’ after the company name.
Limited Liability Partnership (LLP): It is formed under Law No. 5 of 2004 – Limited Liability Partnership Law. Two or more persons are required to form a LP in DIFC. The liability of partners is limited up to partner’s capital contribution.
Limited Partnership (LP): It is formed under Law No. 4 of 2006 – Limited Partnerships Law. Two or more persons are required to form a LP in DIFC. The liability of partners is limited up to partner’s capital contribution.
General Partnership (GP):It is formed under Law No. 11 of 2004 – General Partnership Law. There are no minimum capital requirements for a General Partnership. The liability of the partners in a general partnership is unlimited.
Branch of a Foreign Entity: A branch of a foreign entity can be formed within the DIFC as a recognized entity subject to registration with the Registrar of Companies and approval from DIFC Authority and the DFSA.
Investment Company: It can be incorporated under Law No. 3 of 2006 – Companies Law and part 13 of the Companies Regulations and must also comply with Law No. 1 of 2006 – Collective Investment Law. It can either be registered as an Open Ended Investment Company or a Closed Ended Investment Company.
Types of Business Activities:
Following are the types of business activities under which businesses usually conduct their business operations within the DIFC:
- Businesses providing products and dealing in services other than the financial, legal and accounting services.
- Businesses engaged in providing financial services like accepting deposits, dealing in investments, providing Islamic financial services, etc.
- Businesses providing legal and accounting services in the DIFC and such businesses are called “Ancillary Services Providers”.
- Business providing services of an exchange or a clearing house. Businesses engaging in such business activities are called “Authorised Market institutions”.
Benefits Associated with Conducting Business Operations in the DIFC
Business Entities operating within the DIFC get the following benefits by operating from or within the DIFC:
- No corporate and personal taxes for a period of 50 years from inception
- 100% foreign ownership
- No restriction on repatriation of capital and profits
- Access to UAE’s wide network of double taxation treaties
- Access to a pool of skilled professionals living in Dubai and the region
- A transparent operating environment, complying with global best practices and internationally accepted laws and regulations.
- A modern transport and internet infrastructure.
What is an External Audit?
External Audit is a process which is used as a tool to examine whether a business has prepared its financial statements in compliance with the international financial reporting standards and whether the entity is conducting its business operations in accordance with thelaws and regulations applicable in the jurisdiction in which the business entity is conducting its business operations. An External Audit is carried out by audit firms approved by the authority responsible for regulating the business environment in the related jurisdiction. The External Audit report provides all the necessary information regarding the business entity’s financial position and other business related operations.
Responsibilities of an Auditor
The primary responsibility of an auditor is to be independent of the client entity being audited. In order to preserve independence it is important that the auditor along with the audit firm must not have any personal benefits associated with the results and findings of the external audit engagement. The Auditor must perform the external audit of client entities in accordance with the International standards on Auditing and applicable other laws and regulations.
External Audit Requirement in DIFC:
Companies in DIFC are required to submit their audited financial statements within four months of the end of their respective financial year. Submission of the External Audit report to the regulating authorities in the DIFC is an important requirement for businesses to comply with as this requirement is directly connected with the process of renewing business license in the DIFC.
The reason behind the External Audit requirement is to ensure that business entities operating within the DIFC are complying with the laws and regulations established by the DIFCA, DIFC Judicial Authority and the DFSA. The External Audit requirement also provides assurance to the regulating authorities in DIFC that the business entities have prepared their financial statements in compliance with the applicable accounting standards and that business entities are not involved in any kind of misconduct and illegal activity.
Approved Auditors in DIFC
Only the audit firms that are registered with the DFSA are allowed to perform external audit of business entities operating within the DIFC. The DFSA maintains a list of approved auditors in DIFC which contains names of audit firms that are approved to provide external audit services to companies operating within the DIFC.
To remain a licensed audit firm in the free zones and the mainland, the audit firms must provide proof of their employees participating in development and training programme with regards to maintaining and updating their knowledge in accordance with the changing auditing and accounting standards.
Benefits Associated with External Audit services in DIFC
There are many benefits of the External Audit requirement in addition to the benefit of assisting in the process of business license renewal. The External Audit with favorable opinion provides assurance to the company’s shareholders and stakeholders that the company’s financial reports are accurate and reflects the true and fair view of the company’s financial position. A favorable Audit report also assists in the process of obtaining loan approval from banks and financial institutions. The External Audit report with unfavorable opinion helps in highlighting the areas of weaknesses which are needed to be addressed by the company in order to improve efficiency and effectiveness of its operations.
How can we help you in Complying with the External Audit Requirement?
Nadeem andUmendra Chartered Accountantsis a licensed audit firm in the UAE providing external audit services in DIFC and free zones as well as the mainland UAE. Nadeem andUmendra Chartered Accountants is registered with all the leading banks and financial institutions in the emirate of Dubai as well as the other emirates of the UAE.
In addition to providing external audit services we also provide a variety of other services including accounting, company liquidation, business and tax consultancy services in the UAE. Our objective is to provide our clients with services that are not only of high quality but also add value to the client’s business operations. In order to meet this objective of ours we have a team of qualified professionals having extensive experience in the field of accountancy, audit, business consultancy and tax.