A Guide to the Audit Requirements in JAFZA
The Jebel Ali Free Zone Authority (Jafza) mandates the companies registered under its license to carry out financial audits. Getting the books audited by approved auditors in Jafza is a mandatory requirement for all the companies registered with the free zone authority. Failing to comply with the mandatory audit requirements in Jafza may lead to serious consequences.
If you have a company registered with Jafza, you must maintain proper books of accounts and get audited as per the Jafza Implementing Regulations. However, business owners who are unaware of the Jafza regulations may subject themselves to severe compliance failure. The following blog will serve as a guide to the external audit requirements for companies registered with the Jafza free zone.
Read on to learn more about the audit requirements in Jafza:
Does Jafza Maintain an Approved Auditors List?
As per the Jafza implementing regulations 2016, companies registered with the free zone must get their books of accounts audited by Jafza-approved auditors. The Jafza Registrar maintains a list of approved auditors and the free zone companies must appoint an auditor from that list. Free zone companies are also allowed to appoint more than one auditor.
What’s the Responsibility of Approved Auditors in Jafza?
As per the free zone’s implementing regulations, auditors in Jafza are required to ensure the following:
- Identify the standards or principles used in preparing the accounts
- State whether, in the auditor’s opinion, the accounts have been prepared in line with these regulations and applicable laws, standards and principles
- State whether the books of accounts provide a true and fair view of the financial affairs of the company
- State any other matter or opinion required under these regulations
Is It Mandatory to Submit Audit Reports in Jafza?
Companies registered with Jafza are required to submit their audited financial statements to the free zone authority. This is because the free zone Authority will ask to present the audited financial statements at the time of the company’s trade license renewal.
When to Submit the Audited Financial Statements to Jafza?
All JAFZA-registered Companies /Entities should submit the audit report within 90 days from the end of the financial year or within the extended period if any (Extention to be applied specifically to the Jafza Authority). Hire experienced auditors in Dubai and prepare your accounting records properly to meet this deadline without fail.
What Are the Consequences of Not Submitting the Audit Report to Jafza?
Companies that fail to submit the audited financial statements to JAFZA within the time frame may face severe consequences. They may incur penalties and the free zone Authority will not renew the trade license of the company.
Why Should You Carry Out an Audit in Jafza?
Most companies carry out an annual audit in the UAE when it is a legal compulsion or when stakeholders request it. However, business owners should understand that carrying out an audit has several other benefits as well. The following are some of the reasons why you should carry out an audit through approved auditors in Jafza:
- Enables you to meet the free zone authority’s regulations
- You can get your trade license renewed without any penalty
- Business owners can understand their company’s financial position
- Audited financial statements increase the confidence of shareholders
- The audit helps you identify deficiencies in internal controls and improve the same
- Companies regularly conducting audits enjoy more credibility before banks, government authorities and potential investors
- An audit can help you detect any act of fraud by employees or partners
- Audited financial statements are necessary to avail of any free zone incentives and exemptions granted as per the UAE Corporate Tax Law
Documents Required by the Jafza Approved Auditors to Conduct the Audit
In order to conduct the audit and assurance, the auditors in Jafza may ask the companies to present the documents corresponding to the relevant year, which facilitates the auditor’s job to draw an opinion on the financial position by analyzing the financial statements at the year-end to comply with regulations. The companies are required to present the following documents:
- Bank Statements
- Independent balance confirmations from banks, customers, suppliers, and related parties
- Credit/ debit confirmation for all financial transactions
- Copies of bills and invoices
- Memorandum of Association (MoA)
- Articles of Association (AOA)
- Latest Trade License
- Registration Details for VAT and Excise Tax (If Applicable) including returns of the full year
- Books of Accounts of the company
Get your Books Audited by Approved Auditors in Jafza
Jafza-approved auditors such as Jitendra Chartered Accountants (JCA) can help you to submit your audited financial statements to the free zone authority within time. JCA can ensure that the financial statements are prepared as per the local and international reporting standards. JCA is one of the few audit firms in Dubai with more than 21 years of experience. We are registered with the Jafza as an approved auditor and can help you comply with your annual financial audits. Hire us for a seamless audit process that may add value to your business.