In the United Arab Emirates (UAE), businesses must comply with various legal and regulatory requirements, one of which includes undergoing an annual audit. Auditing is essential for ensuring transparency, maintaining financial integrity, and ensuring compliance with both local and international accounting standards.

The audit process helps in assessing the accuracy of the company’s financial statements, ensuring that the company’s financial practices are in accordance with the law. To facilitate a smooth and efficient audit, certain documents are required.

What is Audit?

An audit is a thorough check of all the books of accounts, financial transactions of a company, statutory records, etc. The aim of an audit is to figure out whether the financial books present the correct and accurate picture of the present condition of the company. An audit also allows getting knowledge about and performing a thorough check of all the activities being conducted in the company and take remedial measures in case of any wrong or illegal activity is found out.

Auditing acts as a safeguard against any kind of malpractice being conducted in the company as all the books of accounts are checked methodically and at regular durations. It also provides a helping hand to the stakeholders and the potential investors and allows them to take decisions which would suit their requirements.

List of Documents Required for Audit of a Company

Payroll Records

Payroll records are crucial to the audit process, as they provide information about the company’s employee expenses, salaries, and other compensation-related matters. The analysis of the payroll report will help the auditors to understand the current situation of the company and accordingly the auditor would suggest to either hire more employees or lay back a few of them.

Bank Statements

Auditors will require copies of the company’s bank statements for the entire audit period. These documents are used to verify cash balances and other transactions reflected in the company’s financial statements. They help auditors trace any discrepancies between the company’s books and bank records.

Invoices and Receipts

The company which is being audited should mention all the transactions conducted in the set duration and should also provide all the invoices and bills.

Sales Invoices: These documents show the details of sales made during the audit period, such as the amount, date, and customer information.

Purchase Invoices: Similar to sales invoices, purchase invoices record the goods and services the company has purchased.

Receipts: Proof of payments made by the company for various expenses, such as utilities, rent, or other operational costs.

These documents help auditors confirm the legitimacy of revenue and expenses, ensuring the accuracy of the income and expense records.

General Ledger and Trial Balance

The ledger contains the details of all the transactions made during a specific period of time. This is necessary for an auditor so that he can tally the total amount with the total mentioned in the books of accounts.

 A summary of all the general ledger accounts, showing the balances of each account. This document is crucial for auditors to check the accuracy of financial statements.

Copies of all legal documents

To collect and verify company’s legal documents in an important part of audit. Legal documents include License, memorandum and articles of association, share certificates, certificate of incorporation, Tax Registration Certificate etc.

Fixed Assets Register

The fixed assets register contains detailed information about the company’s fixed assets, such as property, plant, equipment, and machinery. It should include: Asset descriptions, Purchase dates

Purchase costs, Depreciation details, Current book values etc.

Auditors use this register to ensure that all assets are correctly valued and recorded in the company’s financial statements.

Inventory Records

If the company holds inventory, auditors will require detailed records of stock levels, purchases, and sales. Key documents include: Inventory counts and reconciliation reports, Stock purchase and sales records, Inventory valuation reports and Stock aging reports (if applicable). These documents ensure that inventory is accurately accounted for and valued in the financial statements, avoiding discrepancies or potential fraud.

VAT Returns and Records

As per the UAE VAT law, businesses must file VAT returns periodically. Auditors will require copies of: VAT Returns filed with the Federal Tax Authority (FTA), VAT-related invoices and receipts (sales and purchase) and VAT reconciliation documents. These records help the auditors verify that the company has accurately reported its VAT liabilities and recoveries, as well as ensuring that VAT has been properly accounted for in the financial statements.

Loan Documents

A company may acquire debts during the process of running the company. By providing the proper documents regarding a loan, a lot of time which would have been used up in the audit process will be saved.

This is not a complete and definitive list of the documents that are required during an audit. Some of the other document that might be required by the auditor may include bank statements, the previous audit report, minutes of board meetings conducted, etc. The business should use the above mentioned list as a template for preparation of a financial audit of the company.

Conclusion

For a smooth audit process, it’s essential that companies in the UAE prepare and maintain accurate and up-to-date records. The audit ensures that financial statements reflect the true financial position of the company and assures stakeholders, such as investors, banks, and government authorities, that the company is complying with all relevant laws and regulations.

By having all the required documents ready, businesses can ensure a more efficient and less disruptive audit process, which can ultimately save time and reduce costs. Furthermore, regular audits can enhance the company’s reputation by demonstrating transparency and accountability.