DIFC Approved Auditors
The Dubai International Financial Centre (DIFC) is a renowned financial free zone in Dubai that has issued a mandate requiring companies operating within its jurisdiction to have their financial records audited by DIFC Approved Auditors in UAE. These companies must undergo this auditing process and submit their audit reports to the DIFC Authority within four months of their fiscal year’s end. Compliance with this requirement is essential for renewing their trade licenses. It’s crucial to note that companies cannot engage external auditing firms not registered with the DIFC Authority for this purpose. This audit process serves to assure authorities that companies are adhering to financial regulations and are not involved in any financial irregularities.
In the DIFC, financial and other regulated sectors’ companies are overseen by the Dubai Financial Services Authority (DFSA), while non-regulated companies fall under the jurisdiction of the DIFC Authority.
About Dubai International Financial Centre (DIFC)
Established in 2004, the DIFC serves as an international financial hub facilitating the entry and expansion of financial businesses into emerging markets in the region. Created in accordance with UAE Federal Decree No. 35 of 2004, the DIFC aligns with Dubai's goal to diversify its economic resources and attract more investments. Operating as an independent jurisdiction within the UAE, it boasts its legal and regulatory framework. The DIFC hosts a wide variety of financial and non-financial companies spanning sectors such as banking, professional services, global corporations, insurance, wealth management, and capital markets. What sets the DIFC apart is its unique legal framework aligned with civil and commercial laws, and it operates autonomously with an independent judicial system in line with English Common law. The DIFC Courts exclusively handle civil and commercial matters related to companies registered within the DIFC.
Regulatory authorities in DIFC
The Dubai International Financial Centre (DIFC) comprises three regulatory authorities, each with its specific functions:
Dubai International Finance Centre Authority (DIFCA):
DIFCA acts as a supervisory authority responsible for overseeing the development of various companies within the DIFC. It was established under Dubai Law No. 9 of 2004 and plays a pivotal role in shaping and implementing laws pertaining to financial service firms operating within the DIFC.
Dubai Financial Services Authority (DFSA)
DFSA operates as an independent regulatory authority tasked with regulating financial services both within and outside the DIFC free zone. It ensures that companies adhere to the rules and regulations of the free zone. DFSA’s authority is derived from Dubai Law No. 1 of 2004, granting it the power to make decisions impacting the financial market and cater to the needs of companies.
DIFC Courts
DIFC Courts are established by Dubai Law No. 9 of 2004, which allows for a self-governing administration within the free zone. These courts have the authority to address various commercial and civil disputes that may arise within the free zone. They uphold the highest standards in legal proceedings and dispute resolution, ensuring a fair and just resolution process.
How Companies Should Prepare and Maintain Accounting Records for Auditing?
Companies operating within the DIFC must maintain accurate accounting records that reflect their financial position. Properly maintained accounting books are essential for ensuring compliance with International Financial Reporting Standards (IFRS). These records should include:
- Assets and liabilities of the company.
- Day-to-day entries of all income and expenses.
- Documentation explaining the reasons for income and expenditure.
According to DIFC regulations, these accounting records must be kept at the company's registered office and be open to inspection. Failure to comply with these regulations can result in substantial penalties.
Why Auditing is Mandatory from Approved Auditors in DIFC?
It is mandatory for DIFC companies to submit their audit reports to the DIFC Authority within four months of their fiscal year's end. Failure to do so can lead to the non-renewal of their trade licenses. Engaging DIFC registered auditors is necessary for ensuring compliance with local and international regulations, such as IFRS and DIFC regulations. The auditor's report should confirm that the company's financial statements provide a true and fair view and are free from material misstatements. Furthermore, it should verify that the company is only engaged in activities permitted by its trade license and not in violation of DIFC regulations.
Documents Required by Registered Audit Firms in DIFC for Auditing
To conduct an audit, auditors typically request relevant documents from companies for the year under review. These documents facilitate the audit process and include:
- Memorandum of Association (MoA).
- Articles of Association (AOA).
- Latest Trade License.
- Trial Balance, Balance Sheet, Profit & Loss Statement.
- VAT and Excise Tax Registration Details (if applicable).
- Books of Accounts.
- Audit schedules (e.g., Fixed Assets Register, Aging of Accounts Receivable & Payable with provision for bad debts, accruals, etc.).
- Details of closing stock and work-in-progress at year-end.
- Details of fixed asset additions and disposals during the year with proper supporting documentation.
- Copies of bills and invoices.
Choose Elevate as DIFC Approved Auditors
The DIFC operates as an autonomous financial free zone with its legal framework and regulations. Companies must adhere to these regulations, including the mandatory requirement for auditing their financial records. This not only enhances their credibility with stakeholders, government bodies, lenders, and other authorities but is also a necessary step for maintaining business operations.
Elevate, as registered auditors in DIFC, can help companies navigate these requirements, ensuring peace of mind while remaining compliant.
