Discover Why Financial Audit is Mandatory in the UAE

Yes, financial auditing is important and mandatory due to its regulatory compliance in the UAE. But it depends on the jurisdiction of your company i.e. mainland or free zone, legal type, and thresholds related to taxes in the UAE (e.g. mandatory audit for companies with revenues above AED 50m).

Laws & Ministerial Decisions Indicating Requirement of External Audits

Auditors are required to review the transactions of the company in sufficient detail along with the related party transactions. Auditors must also report on whether there are any contraventions that adversely affect the financial position of the company. If auditors notice any violations or fraudulent transactions or transactions indicating money laundering attempts, they must notify the same to the relevant authority. Below are some of the many references from the laws and regulations that indicate the importance and requirement of external audits in the UAE.

• Free Zones: Many free zones in UAE require free zone registered companies to submit annual audit reports to be able to renew their trade licenses.
• Article 27 (1) of Federal Decree Law No. 32 of 2021: Every limited liability and joint stock company must do audit of their accounts.
• Article 27 (2) of Federal Decree Law No. 32 of 2021: Requires companies to prepare profit and loss as well as balance sheet of the company and apply international accounting and financial reporting standards. This is to ensure that the books of accounts present accurate picture of the company’s financial statements.
• Article 102 of Federal Decree Law No. 32 of 2021: Article 102 requires mainland LLC and public joint stock entities to appoint an auditing company to audit the books of accounts. To help you select the right audit firm, refer to our guide about top 10 audit firms, interview and meet each of them, and select the firm best suited to your business.
• Article 54 of Federal Decree Law No. 47 of 2022: Article 54 gives authority to the FTA and the Minister to request audited financial statements from taxable persons in the manner required by the authority.
• Ministerial Decision No. 82 of 2023: Ministerial Decision No. 82 makes it compulsory for qualifying free zone persons and companies making revenue above AED 50m to maintain audited financial statements.
• Ministerial Decision No. 84 of 2025: Makes it mandatory for a tax group to prepare and maintain audited accounts on an annual basis. Failure to do so shall be considered a violation of the law and relevant administrative penalties shall apply. For more details, refer to the Ministerial Decision No. 84 of 2025.

Benefits of Financial Audit for a Business

Audits not only help ensure compliance with laws and regulations, but also help in achieving the following:

• Timely identification of fraud and errors
• Prevention from misstatement of financial statements
• Identification of risky areas of the business
• Ascertain Internal control weaknesses
• Identification of unusual transactions
• Discovering the signs of bankruptcy such as, high debt to equity ratio, long outstanding payable balances which can result in legal cases from suppliers, long overdue receivables which can become bad debts, etc.
• Cash flow and working capital issues