The UAE’s tax and audit landscape has shifted noticeably. Under the Federal Tax Authority (FTA)’s evolving rules, companies—including free-zone entities and mainland operations—face more stringent audit and financial statement requirements. For example:
-
From tax periods commencing 1 January 2025, all tax groups must prepare audited special-purpose aggregated financial statements under Federal Tax Authority Decision No. 7 of 2025.
-
Ministerial Decision No. 84 of 2025 revises when audited financial statements are required: previously only for non-groups above AED 50 million revenue; now the scope is broader.
-
With the introduction of the UAE Corporate Tax regime (via Federal Decree-Law No. 47 of 2022), auditors and businesses alike must now furnish documentation that links the financial statements to the corporate tax return and transfer pricing obligations.
In short: audit readiness in 2025 means more than just closing the books. It means alignment of accounting, tax, documentation and reporting from the outset.
Key Areas to Focus on for Audit-Readiness
a) Financial close and documentation discipline
Ensure your month-end and year-end close processes are tight. That means bank reconciliations done promptly, suspense items cleared, cut-off procedures applied.
Maintain an organised folder structure: trial balance, supporting schedules, reconciliations, invoices, contracts, fixed-asset roll-forwards etc.
Retain relevant records. The FTA emphasises that businesses keep sufficient documentation to support VAT, Corporate Tax and audit queries.
b) Accounting policy, judgments & consistency
Ensure your accounting policies (e.g., revenue recognition, provisioning, depreciation) are documented and consistently applied across periods and entities.
For tax groups, the aggregated financial statements must use uniform accounting policies for all members.
Capture management judgments (e.g., impairment, cut-off assessments) in short explanation notes so auditors have immediate access.
c) Corporate Tax, Transfer Pricing & audit link
Even if your business is small, check whether you have related-party transactions or fall within thresholds for TP disclosures.
d) Special-Purpose & Aggregated Financial Statements for Tax Groups
If you form a tax group (two or more taxable persons approved by the FTA), you must prepare audited aggregated financial statements under the special-purpose framework.
The statements must eliminate intra-group transactions, be in AED, and use IFRS or IFRS for SMEs.
Even if the group’s revenue is below previous thresholds, the new rule makes audited statements mandatory for tax groups from 1 Jan 2025.
e) Audit engagement & planning ahead
Engage your external auditor early. Audit seasons are filling up, especially given expanded scope and additional tax-related work.
Map your timeline: identify when you’ll have draft financials, when the tax return must be prepared, when the auditor must sign off. Coordination is crucial.
Prepare audit packs in advance: schedules, reconciliations, documentation. This saves time and avoids last-minute stress.
Practical Steps and Timeline
Here’s a high-level checklist you can implement:
1) Now (early in the year)
-
Confirm whether you are required to prepare audited financial statements or aggregated statements (for tax group).
-
Review your accounting policies, ensure they are documented.
-
Ensure your chart of accounts, internal reporting, cut-off rules align with audit needs.
-
Engage auditor or ensure service availability.
2) Mid-year & quarter-ends
-
Maintain strong monthly/quarterly close processes: reconcile, clear suspense, review related-party transactions.
-
Update TP policy/benchmarking if you have related-party dealings.
-
Maintain folder of supporting evidence for invoices, contracts, fixed assets, etc.
3) Year-end / period close (for FY 2025)
-
Finalise trial balance, post year-end journals, reconcile VAT and tax control accounts.
-
Prepare audit pack: trial balance, financial statements, disclosures, significant estimates, management notes.
-
Prepare tax return links: ensure financials tie to tax return adjustments, schedules, provisions.
-
Provide auditor with everything promptly.
4) Post-audit / filing
-
Review auditor’s management letter or findings; implement action plan.
-
Ensure tax filing deadlines are met; maintain records for required retention period.
-
Use lessons learned to improve for next cycle.
Common Pitfalls to Avoid
-
Waiting until December (or later) to begin audit preparations—tight timing leads to rushed work and errors.
-
Incomplete documentation: missing invoices, poor cut-off evidence, lack of related-party contracts.
-
Ignoring the tax link: if your audit doesn’t consider tax provisions and TP properly, you risk inconsistencies and potential FTA scrutiny.
-
Inconsistent accounting policies across group entities: this will complicate aggregated statements.
-
Not engaging auditor early: availability and thoroughness suffer.
Why This Matters
Being audit-ready is not just about ticking boxes. In the UAE context:
-
It builds confidence with stakeholders (investors, banks, regulators).
-
It ensures you meet the FTA’s expanded audit and reporting obligations, reducing risk of penalties or non-compliance.
-
It supports efficient tax filing and reduces duplication of work.
-
It gives you control: instead of scrambling at year-end, you can focus on business strategy.
How RegFin Solutions Can Help You
At RegFin Solutions, we specialise in guiding UAE businesses through the audit-ready journey: from close-process improvement, documentation structuring, tax-audit linkage, to helping you liaise with auditors effectively. Let us help you adopt a proactive audit-ready mindset for 2025 and beyond.
In Summary
The world of audits in the UAE has evolved. What used to maybe be a routine exercise is now a strategic compliance milestone. By starting early, aligning your accounting and tax processes, documenting consistently, and engaging professionals, you position your business to not only pass audit but to use it as a foundation for better financial governance.
Let 2025 be the year your business runs a smooth, calm, and confident audit process.
