3 Types of Audit and Assurance Services in the UAE

Under Article 27 of Federal Decree-Law No. 32 of 2021 on Commercial Companies, the UAE’s current Commercial Companies Law, businesses are required to appoint at least one auditor to audit their accounts every year. Shareholders and partners are entitled to obtain audited financial statements and audit reports from their auditors in the UAE.

The Commercial Companies Law also requires that a company’s accounts for a given fiscal year be reviewed by an independent audit firm in Dubai, such as DMCC approved auditors, who prepare an audit report on those accounts. Audited financial statements are generally required to be presented to the company’s Board of Directors ahead of the General Assembly, and copies of the audited financial statements and audit report are submitted to the relevant UAE authorities, such as the Federal Tax Authority, within a set window following the General Assembly. Exact timelines can vary by company type and size, so it’s worth confirming the specific deadline that applies to your entity with a licensed auditor.

The 3 Types of Audit and Assurance Services in the UAE

Which type of engagement makes sense depends entirely on what the business actually needs it for.

Engagement Types at a Glance

Engagement Type	Level of Assurance	Typical Use Case
Review	Limited assurance	Interim reporting, lender covenant checks, lighter-touch stakeholder reporting
Compilation	No assurance	Presenting management’s own figures in a standard format, internal use
Audit	Reasonable assurance	Statutory annual audit, investor and regulator reliance

Review Engagement

A review conducted by top audit firms in Dubai gives users limited assurance that the financial statements comply with international and UAE financial reporting standards.

A review is a genuinely different engagement from an audit. It offers less assurance because the auditor doesn’t carry out the more thorough procedures a full audit requires. A review typically looks at:

• The company’s accounting practices
• Processes for accumulating and recording financial information
• Actions taken during owner or director meetings
• Management’s responsibility and systems for preventing and detecting fraud
• Written representations from management on the accuracy of information provided
• Management’s knowledge of any known fraud
• Analytical procedures used for comparison
• Information on significant subsequent events
• Ratios derived from recorded book amounts
• Accountants’ expectations around recorded amounts
• Plausible relationships between recorded amounts

These analytical procedures give a better understanding of key relationships between figures, supporting reasonable assurance on the overall soundness of the financial condition presented in the statements, without the depth of testing a full audit involves.

Also check: Statutory Audit Services in Dubai

Compilation Engagement

In a compilation engagement, audit firms in Dubai help management present available financial information in the form of financial statements, without providing any assurance on its reliability or making material modifications to bring it in line with international or local reporting standards.

Compared to a review, a compilation involves a much narrower scope of procedures. The firm produces a report that expresses no opinion and offers no assurance on the financial statements at all.

A compilation generally involves:

• Gaining an overview of the business, its financial reporting system, and its accounting principles
• Presenting the financial information in an accepted financial reporting format

Auditors in the UAE, including DMCC-approved auditors, express no assurance on the accuracy of the information presented in a compilation. The resulting report explicitly states that the service provided was a compilation engagement, not a review or an audit.

Related: Compliance Audit Services in Dubai

Audit Engagement

An audit engagement gives users of the financial statements an opinion on whether those statements have been prepared in accordance with the applicable financial reporting standards. Completed by an independent audit firm in Dubai, it gives investors, lenders, and regulatory authorities a meaningfully higher level of confidence than a review or compilation.

Key procedures carried out during an audit engagement include:

• Evaluating the company’s internal control system
• Gaining a full understanding of the business, including its financial reporting and operations
• Observing a physical inventory count, or performing an inventory count audit
• Testing documentation supporting classes of transactions or account balances
• Performing analytical procedures on expected and unexpected variances
• Confirming account receivables directly with third parties

UAE tax authorities require a clean, unqualified opinion from audit firms in Dubai on a company’s financial statements. An unqualified opinion confirms the statements are presented fairly and conform to the applicable accounting principles.

Also check: External Audit Services in Dubai

Worked Example

A Dubai trading company needs three different things across a single year: a lender requests a lighter mid-year check before extending a credit facility, management wants its internal figures formatted properly for a board presentation, and the company needs its statutory annual audit for Federal Tax Authority submission. These map directly to the three engagement types: a review for the lender, since limited assurance is sufficient for their purposes; a compilation for the board presentation, since no assurance is actually needed, just a clean presentation of management’s own numbers; and a full audit for the statutory year-end requirement, since that’s the only engagement that provides the level of assurance regulators and tax authorities require.

Also check: Financial Statement Audit Services in Dubai

Common Mistakes in Choosing an Engagement Type

• Assuming a review satisfies the statutory audit requirement. Only a full audit engagement provides the reasonable assurance UAE authorities require for annual filings.
• Treating a compilation as if it offers some assurance. A compilation report explicitly provides none, it’s a presentation service, not an assurance engagement.
• Paying for a full audit when a review would genuinely suffice. Matching the engagement type to the actual purpose avoids unnecessary cost.
• Using an outdated legal reference. The UAE Commercial Companies Law changed in 2022, references to the old 2015 law are no longer current.

Frequently Asked Questions

What’s the difference between a review and an audit engagement?

A review provides limited assurance through analytical procedures and inquiry, while an audit provides reasonable assurance through much more thorough testing, including internal control evaluation and third-party confirmations.

Does a compilation engagement provide any assurance?

No. A compilation involves presenting management’s financial information in a standard format, with no opinion or assurance expressed on its accuracy.

Which engagement type is legally required for UAE companies?

A full audit engagement is required annually under Federal Decree-Law No. 32 of 2021, the current UAE Commercial Companies Law.

Can a review engagement replace the statutory annual audit?

No. A review provides limited assurance only and doesn’t meet the reasonable assurance standard UAE authorities require for the statutory audit.

What kind of audit opinion do UAE tax authorities expect?

A clean, unqualified opinion, confirming the financial statements are fairly presented and conform to the applicable accounting principles.

Choosing the Right Engagement for Your Business

The right engagement type comes down to who actually needs to rely on the numbers, and how much assurance they genuinely require, not defaulting to the most thorough (and expensive) option out of caution.

AFD Auditors can help determine which engagement type fits your specific situation and manage the process from planning through to reporting.