Understanding DIFC’s Financial Reporting Standards for Auditors

Auditors need to be careful while working with financial reporting standards within global business hubs. DIFC adds another level of sophistication with its peculiar regulations and reporting requirements. Understanding the standards is not a matter of necessity but is key to ensuring compliance and upholding professional integrity for auditors working in DIFC. In this article, we break down DIFC’s financial reporting standards into simple essentials that make compliance easier for the auditors in UAE.

Auditors at Jitendra Chartered Accountants (JCA) are knowledgeable and qualified having comprehensive knowledge of DIFC accounting and reporting standards. We make sure that your financial reports are in line with the standards applicable in the DIFC.

What Is DIFC and Why Is It Important?

DIFC refers to Dubai International Financial Centre. This independent financial hub was created by the UAE Federal Decree No. 35 of 2004, also called the DIFC Law. Its creation aimed to attract foreign investments into the Middle East to make a financial centre with easier provision of financial services. It functions under its laws and regulatory framework and forms an autonomous jurisdiction for all businesses.

DIFC has firms in all sectors, ranging from banking, insurance, and wealth management to capital markets. The diversity therefore requires that the auditors get familiar with the specific reporting requirements of DIFC authorities.

Key Financial Reporting Standards in DIFC

1. Auditing Requirements

• Companies in DIFC are private companies unless otherwise stated as a public company.
• Public companies must have shareholders of at least 50 individuals and be publicly listed.
• The private firm, with 20 shareholders or more, has to do the mandatory filing of audited financial statements.
• The said statement needs to be filed online not later than seven months following the end of the financial year via the DIFC Client Portal.

2. IFRS Standards

DIFC companies have to comply with IFRS accounting and reporting standards, which are legally enforced in the UAE.

3. Annual Reporting

For license renewal, DIFC firms need a Validation Statement.

4. Ultimate Beneficial Ownership (UBO)

Every company shall maintain a register of ultimate beneficial ownership. This register shall be established within 90 days from the date of registration of the company in DIFC, and the information must be submitted to the Companies Registrar in DIFC.

Regulatory Bodies of DIFC

Three are the main bodies in charge of financial activities at DIFC, which are charged with different roles:

1. Dubai International Financial Centre Authority (DIFCA):

Charged with the development and administration of the regulatory framework

2. Dubai Financial Services Authority (DFSA):

Free-standing body to regulate financial services and enforce compliance within the DIFC.

3. Courts of DIFC

The court acts as an authority for the resolution of civil and commercial disputes in the free zone.

Every business in the DIFC is responsible for following these regulatory bodies in DIFC.

Steps for Auditors in DIFC

1. Keeping Proper Accounts

Auditors should ensure that companies prepare proper accounts in accordance with International Financial Reporting Standards, IFRS. There should be access to those accounts at the registered office during inspection.

2. Submission of Returns to Regulators

DIFC has regulations where the companies must file several reports regarding the clients, insurance, and fund auditors.

3. Audit Documentation Preparation

Preparation for auditing mainly includes the registration proof of the name of the business, license approval as proof of the main activity of the company, details regarding shareholders and managers, and an office address.

Why Does DIFC Stand Out?

There are many advantages that auditing firms gain in DIFC:

1. 100% Foreign Ownership: Auditing companies can enjoy 100% foreign ownership.
2. No taxation of the income or earnings of individuals.
3. Compliance with the best universal laws
4. Ease in transferring all capital and profits
5. First-class infrastructure to support your transactions

Why Choose Jitendra Chartered Accountants as your Audit Partner?

JCA provides top-notch auditing services in DIFC and everywhere else in the UAE. Our auditors have complete knowledge of the auditing and reporting standards in the UAE and its various free zones. We help you compile your financial reports in complete and accurate form without a chance of error.