External audits can be a daunting process for business owners and finance teams in the UAE. However, the right preparation turns what appears to be a daunting process into a manageable and value adding exercise. Whether your company is based in Dubai’s Business Bay, Abu Dhabi’s ADGM or anywhere across the Emirates, knowing how to prepare effectively will ensure your audit runs smoothly while providing insights to enhance your financial operations.

An external audit is not just a compliance checkbox. It is an independent analysis of your financial statements that gives your stakeholders, investors, regulatory bodies and financial institutions credibility. For businesses that operate in regulated industries such as real estate, construction or businesses that require RERA registered auditors, preparation becomes even more important.

Start Early and Plan Strategically

The most common mistake that companies make is to treat audit preparation as a last minute scramble. Starting your preparation at least 2-3 months before the scheduled date of the audit provides your team with enough time to get their records organized, handle discrepancies and work with your external auditors. Create a detailed timeline that shows all the preparation activities. It involves collecting documents, resolving accounts, scheduling preparation and internal reviews.

Your timeline should include possible delays or issues that may occur during the process. Companies that plan strategically often do their audits in less time and with fewer adjustments. Communications with your audit firm should start early. Hold a meeting before the audit to discuss scope, timing, key areas of focus and any changes in your business operations or accounting policies during the year.

This conversation helps auditors understand your business better while providing you with clarity as to what to expect. Reliable firms such as Asad Abbas & Co., with more than 15 years of UAE accounting experience, typically conduct detailed planning meetings in which both parties are aligned before fieldwork starts.

Organize Your Financial Documentation

Complete and well-organized documentation forms the foundation of efficient audit preparation. Your financial records should be complete, accessible and adequately maintained all year long, not just assembled just before the audit. Ensure that all monthly and quarterly financial statements are finalized and reconciled.

This includes your balance sheet, income statement, cash flow statement and statement of changes in equity. Each account on these statements should be backed up by detailed schedules and reconciliations. Bank reconciliations require special attention as they usually reveal timing differences or errors that must be corrected.

Supporting documentation for significant transactions should be readily available. It includes contracts, invoices, purchase orders, payment vouchers, loan agreements, investment documents and lease agreements. For companies that have inventory, having accurate inventory counts and valuation records is crucial. Fixed asset registers need to be updated with all additions, disposals, depreciation calculations and physical verification records.​

Tax related documents need to be well organized. VAT returns, corporate income tax filings, excise tax documentation and correspondence with the Federal Tax Authority should all be compiled and cross-referenced with your accounting records. Given the changing tax landscape in the UAE, it is essential that your tax compliance documentation is auditable, which helps you to protect yourself from potential issues.

Address Potential Issues Proactively

Conducting an internal review prior to the external audit helps you to identify and fix any possible issues that may arise during the audit process. This proactive approach will save time, minimize the risk of material adjustments and reflect great internal controls to your auditors.

Review your accounting policies and make sure they are consistently followed throughout the year. Changes in accounting standards or business operations could lead to policy changes. Document these changes clearly as well as their financial impact. Your auditors will appreciate transparency regarding any changes rather than finding them out during fieldwork.

Analyze unusual transactions, significant estimates and judgmental areas in your financial statements. Related party transactions, revenue recognition policies, provision calculations and fair value measurements often grab the attention of auditors. Having clear documentation and sound business rationale for these items is a sign of good financial governance.

Resolve outstanding reconciliation items before the audit starts. Unreconciled items lead to additional work during the audit and may indicate control weaknesses. Whether it is bank reconciliations, intercompany balances or supplier statement reconciliations, clearing all these items in advance considerably makes the audit process smooth.

Prepare Your Team and Systems

Your finance team needs to know their role in the audit process and be available to respond to auditor queries as quickly as possible. Designate one main point of contact who will coordinate with the audit team and make sure that information flows in an efficient manner.

This person should possess extensive knowledge of your accounting systems, business operations and where they can find required documentation. Ensure that your accounting systems are accessible and function properly. That is because auditors will need to extract reports, look at transaction details and possibly test system controls.

Having system access ready, reports pre-prepared and technical support available avoids unnecessary delays. Companies that use cloud-based accounting systems should ensure that access by the audit team is appropriately configured. Brief your operational teams about the timeline of the audit and potential information requests.

Auditors may need to communicate with department heads, verify the existence of physical assets, confirm contractual terms or understand specific business processes. When your entire organization is clear on the importance of audit co-operation, the process becomes smoother.

Maintain Open Communication

Maintaining open communication with your auditors helps establish a productive working relationship throughout the audit process. Respond to requests for information as soon as possible and in a complete manner. If you need clarification on what is being requested or you need more time, communicate this right away rather than waiting for deadlines to pass. Be honest about any challenges or uncertainties in your financial reporting.

Auditors appreciate transparency and can often offer advice on complex accounting issues. Trying to hide issues or give incomplete information only develops problems later in the audit process. Schedule regular status meetings during the audit to discuss the progress, address emerging issues and understand preliminary findings.

These conversations give you the opportunity to correct misunderstandings very quickly and provide additional context where necessary. They also prepare you for the final audit report by providing you with insights into likely adjustments or recommendations.

With decades of experience across regulated industries, Asad Abbas & Co.’s Audit & Assurance services help businesses in UAE navigate external audits with clarity, compliance and confidence while uncovering insights that strengthen financial controls. Get in touch with our expert audit team today to ensure your next external audit is seamless, efficient and value driven.

Further Read: Why Every Business in the UAE Should Consider a Financial Audit

Go Back