External Audit UAE: Preparing Audited Financial Statements

External audits are an important part of maintaining accurate financial records and meeting regulatory requirements in the UAE. For many businesses, however, preparing for an audit can feel like a last-minute, anxiety-ridden compliance exercise, particularly when financial records are incomplete or supporting documents are difficult to organize.

Hence, in this article, we will discuss what an external audit is, what its objectives are, and various other important aspects so you know what to expect and can prepare better.

What Is an External Audit?

An external audit is an independent assessment of a company’s financial statements and records performed by a qualified accounting professional. The purpose of an external audit is to obtain reasonable assurance about whether the financial statements accurately reflect the company’s financial position and comply with applicable accounting standards and legal requirements. Where required, external audits also help investors, banks, shareholders, and regulators assess how much confidence they can place in the financial statements.

To ensure that such an analysis is free of bias, management influence, and conflicts of interest, the audit must be performed by a third party that is not employed by or otherwise related to the company.

Do You Need an External Audit in the UAE?

Not every UAE business is required to undergo an annual external audit. The requirement depends on the company’s legal structure, tax status, and revenue. Let us look at which UAE businesses are required to maintain audited financial statements.

Mainland companies

According to Corporate Tax regulations, taxable persons that are not tax groups and whose revenue exceeds AED 50 million during the relevant tax period must maintain audited financial statements.

Tax groups, on the other hand, are required to prepare and maintain audited special purpose financial statements in accordance with FTA requirements. This is separate from any standalone audit obligations that individual group members may have under company law, free zone rules, banking, shareholder, or regulatory requirements.

Additionally, under the Commercial Companies Law, mainland businesses that are joint stock companies or limited liability companies must supply audited financial statements and copies of the last auditor’s report and accounts of the group to partners/shareholders who request these documents within 10 days of such requests.

Free zone companies

If your business has achieved the Qualifying Free Zone Person (QFZP) status for preferential tax treatment, it must maintain audited financial statements to comply with the requirements of Corporate Tax Law.

Corporate tax angle

Under Corporate Tax (Federal Decree Law no. 47 of 2022), the Minister of Finance has the power to decide which businesses must prepare audited financial statements. This power was first exercised in the Ministerial Decision no. 82 of 2023. But this decision was replaced by Ministerial Decision no. 84 of 2025.

Curious about the various Corporate Tax-related compliance requirements? In a previous article, we explained the scope of Corporate Tax Law, tax rates, registration requirements, filing deadlines, and penalties.

Who is exempt?

Mainland businesses below the AED 50 million revenue threshold generally do not need audited financial statements solely for Corporate Tax compliance, unless they are part of a Tax Group or fall into another Corporate Tax audit category. However, they may still need an audit under the Commercial Companies Law, their constitutional documents, shareholder requirements, banking arrangements, or sector-specific regulations.

A free-zone business that is not a Qualifying Free Zone Person is not required to maintain audited financial statements for Corporate Tax compliance. However, it may still be subject to audit requirements under the regulations of its free zone.

What is the difference between internal and external audits?

Although both involve detailed reviews, internal and external audits serve different purposes. An external audit, by definition, is a review of a company’s financial statements. But an internal audit does not have to be limited to financial records. If the management thinks there’s value in auditing operational performance, an internal audit into operations may be launched. External audits generally focus on the integrity of financial reporting, while internal audits can also evaluate areas such as operational efficiency, internal controls, and risk management.

Some examples of internal audit objectives are described below:

What to Expect from an External Audit?

If your accounting records are complete and well organized, the external audit is usually a straightforward process. Generally, you will be required to provide access to your financial records, including your tax returns, tax invoices, credit notes, debit notes, journals, ledgers, cash books, and bank statements, along with the financial statements you have prepared for the period under review.

If the auditor identifies complicated transactions or unclear records, they may request additional supporting documents. Your management and accounting team must remain nimble and responsive during the audit period.

Once the auditor has finished preparing the auditor’s report, you will be able to review it and discuss it with directors and shareholders. This gives management an opportunity to discuss the issues identified during the audit and agree on appropriate corrective action. Since external audits are a statutory requirement, you should consider engaging auditors early so that you do not miss any important deadlines.

The External Auditor’s Report & Opinion Types

Auditor’s reports are summaries of audits. They explain the scope of the audit, the basis for the auditor’s opinion, and any material issues that were identified. In the context of external audits, a report will contain the auditor’s opinion on whether the financial statements are accurate for the period under review on the first page itself.

Then, the auditor’s report will move on to explaining the reasons behind the opinion and whether management provided sufficient evidence. The auditors then end their report by describing any issues with the financial records that were discovered during the audit.

Here are the different types of audit opinions that may be issued for your financial statements.

Want to learn more about different types of audit opinions and what they mean for your accounting processes? In a previous article, we discuss the different types of audit opinions, what they mean for management, and how to prepare for audits.

Who Can Perform an External Audit?

By definition, an external audit has to be carried out by a qualified professional not employed by the company or related to the company’s owners/directors or be an owner themself. Additionally, the auditor must be registered in the relevant UAE auditors’ register and hold the required licence / approval to perform audit services. Some Free Zone Authorities may also require the auditor to appear on their approved auditor list. The key requirements include:

1. Qualifications
   A minimum of a bachelor’s degree in accounting or related specializations recognized in the UAE (minimum 15 credit hours in approved accounting courses) plus a valid fellowship with the Emirates Association of Accountants and Auditors
2. Experience
   Minimum 5 years of experience in auditing after obtaining the relevant academic qualification (Experience certificate required)
3. Conditions for non-citizens
   UAE auditing experience requirements for non-citizens are reduced to 1 year if the applicant has more than 10 years of experience outside the UAE, 2 years in case of 5-10 years of outside UAE experience, and 3 years in case of 2-5 years of outside UAE experience

In the case of public joint stock companies, the external auditor must satisfy the following additional conditions:

1. 5 years of experience auditing public joint stock companies
2. Certified auditor registered with the Securities and Commodities Authority (SCA)
3. Must not be a partner or a director or be serving in an administrative, technical, or executive capacity with the company
4. Must not be related to the founders or directors of the company through partnership, agency, or first- to second-degree relations
5. Must be an accredited auditor with the Central Bank of the UAE (CBUAE) if the company is registered with CBUAE
6. Must provide security to the SCA if required

External Audit Cost in the UAE

In the UAE, the price of an external audit can start from AED 5,000 to AED 15,000 for small companies, and the cost goes up with company size, transaction volume, and complexity. Skrooge can connect you with licensed auditors, with audit fees starting from AED 2,999. Our assistance is not limited to simply shortlisting professional firms that suit your size and industry. We also handle auditor queries and ensure that your tax records and financials are consistent.

Have concerns regarding the audit-readiness of your financial statements? Skrooge focuses on cost-efficient accounting support, responsive communication, and audit readiness rather than last-minute compliance work. Explore our Accounting & Tax package to learn more!

External Audit Deadlines

UAE Corporate Tax rules specify which businesses are required to maintain audited financial statements. However, it does not set a single audit deadline that applies to every business. Certain free zones like the Dubai Multi Commodities Centre (DMCC) require that a company’s annual accounts must be prepared and approved by its directors, examined and reported on by a DMCC-approved auditor, and laid before a General Meeting within 6 months after the end of its financial year.

Even where no specific deadline applies, maintaining an annual audit cycle helps businesses keep their financial records and compliance processes organized.

The Commercial Companies Law requires LLCs and public joint stock companies to convene a General Assembly within 4 months from the end of the financial year, where the audited financial statements and the auditor’s report must be discussed.

FAQs