EXTERNAL AUDIT SERVICES FOR COMPANIES REGISTERED IN DAFZA
Dubai Airport Free Zone (DAFZA) is one of the leading free trade zones in Dubai, UAE. It was established in the year 1996 with a purpose to attract investment activity in the region. It is located in the heart of Dubai next to the Dubai Airport. This is one of many independent free zones established in Dubai, UAE. Each free zone is independently governed by a specific authority responsible for all the business operations conducted within the free zone. Most of these free zones offer total exemption from tax along with some other facilities like 100 per cent foreign ownership and no currency restrictions for businesses operating within the free zones. In general, there are very few restrictions imposed on business activities conducted within the free zones and with companies that are based outside the UAE. There are some additional requirements in place for companies doing business outside the free zones but within the UAE. Over the years, these free zones have displayed significant growth and are also internationally recognized as suitable and attractive places for investment activities.
Types of Companies in DAFZA
The following types of companies can set up their businesses in DAFZA:
- Free zone company (FZCO) with minimum one shareholder and maximum of up to 50 shareholders
- Branch office of an existing company
Types of Business Licenses in DAFZA
Companies intending to operate their business activities in DAFZA are required to obtain a Dubai Airport Free Zone business license depending on the nature and type of their business operations. Following are the type of licenses that are available in DAFZA:
- Trading license
- Service license
Who is responsible for Regulating the Dubai Airport Free Zone?
The Free Zone Authority is responsible for regulating the businesses operating within the Dubai Airport Free Zone. The free zone authority is also responsible for establishing the requirements relating to the formation of businesses in the free zone. The authority also administers the processes and procedures relating to new licensing, renewals for licenses, financial activities and reporting of businesses in DAFZA. The requirements are not onerous but it is important for registered companies to be aware of the requirements in order to avoid any conflict.
External Audit – A Compulsory Requirement to Renew Business License
All the businesses operating in DAFZA are required to renew their licenses at the end of their respective financial year. Each company registered with the free zone authority is required to submit its audited financial statements within four months of its financial year end as part of the renewal process for its license. Financial statements of businesses must be audited by DAFZA approved auditors. The purpose to submit audit reports is to ensure that organizations are conducting their activities in accordance with the rules established by the free zone authority and the UAE government (wherever applicable). This helps in providing assurance to the authority that the information in the financial reports provided by the business can be trusted upon and that there is no reason to believe that it is trying to hide something from its stakeholders or acting inappropriately.
Why DAFZA requires External Audit?
There are many reasons as to why the Free Zone Authority requires the registered companies to submit external audit reports but some of the key reasons are as follows:
- External audits performed by DAFZA registered audit firms provide the authorities with information they need to ensure that the free zone is being properly regulated and controlled.
- An independent external audit report also provides assurance as to the completeness and accuracy of the business’s financial statements and other reports containing financial information.
- An independent external audit also provides the authorities with information and insight as to whether the business is involved in any misconduct or fraudulent activity.
Authorized Auditors in DAFZA
The free zone authority maintains a list of audit firms in DAFZA that are approved to perform external audits in Dubai Airport Free Zone. Companies are required to select an audit firm from the list of DAFZA approved audit firms to perform the external audit of their financial statements. The audit firms mentioned on the list maintained by the free zone authority are all those firms that have been licensed to provide financial services in Dubai and other Emirates of the UAE. DAFZA has its own set of procedures and processes in place for approving an audit firm to perform external audits of DAFZA registered companies. In order to remain on the list of approved auditors in DAFZA the audit firms are required to provide proof to the authorities that their staff members are maintaining and updating their knowledge in accordance with the changing accounting and auditing standards. The firms are also required to provide evidence of their employees being regularly provided with opportunities to participate in professional development and training programs in order to assist their employees in improving their knowledge and skills.
Benefits of an External Audit in DAFZA
Some of the key benefits of external audit of DAFZA registered companies are summarized below:
- One of the main benefits of external audit is that It helps companies in renewing their business licenses.
- External audit report provides the management with assurance and comfort that the financial statements are accurate and in accordance with the international accounting standards and international financial reporting standards.
- The financial statements audit also helps the free zone authority by providing them with information as to whether the companies are conducting their business activities within the laws and regulations established by both the free zone authority and the UAE.
- The requirement of external audit in DAFZA also provides banks, Investors and financial institutions with confidence to make investments in businesses operating within DAFZA.
- Employees view the external audit requirement and the audited financial statements as an indicator of secure financial environment in the free zone.
How Nadeem & Umendra Chartered Accountants can Help You?
Nadeem and Umendra Chartered Accountants is a well reputed and highly accredited audit firm in the UAE. Our auditors are qualified Chartered Accountants and Association Certified Chartered Accountants with extensive auditing experience of SMEs and Corporates operating in diverse industries. During the course of audit we do not only make sure that your books of accounts are accurate and complete, but also highlight internal control weaknesses and concerning areas of financial management which are causing you loses in terms of efficiency and effectiveness. We are also registered with all leading banks and financial institutions based in the UAE.