Dubai Multi Commodities Centre:
The Dubai Multi Commodities Centre (DMCC) is a Free Zone created in 2003. The purpose was to become a major constituent in the world commodities market. To achieve this goal the Centre features a modern infrastructure designed around the requirements of commodity-based businesses and the service providers supporting the commodities markets. The Centre supports trading in diamonds, colored stones, energy, gold, precious metals, tea and even cotton. Support industries include finance, logistics and insurance. With a Standard & Poor’s rating of “A”, the Free Zone has attracted businesses ranging from global giants and key international players to medium sized enterprises and start-ups. Some attractive features for businesses include:
1. Vault facilities with high tech security
2. Nearby Assaying facilities
3. Package delivery services
4. Proximity to shipment facilities
5. Preferential rates for bullion freight
6. A purpose-built Jewelry and Gemplex to facilitate the manufacture of precious metal jewelry
7. A commercial tower to house wholesale, trading and banking operations
8. One often overlooked feature of the Centre is the virtually crime-free environment. The UAE is a stable political and social geographical region in a world of increasing social insecurity.
Defining External Audit:
An External Audit is an examination of a company’s financial reporting performed by a fully impartial and independent Audit Firm. The Auditor analyses the company’s accounting records for accuracy and investigates the recording processes used. The Auditor reports to the Company the results of the Audit in terms of the validity of the company’s financial reporting. This external evaluation gives insight into the Company’s business status and fiscal well-being. External Auditors are required to be completely independent of the audited company and are limited in the activities they can provide as part of the audit process. External Audits are required by, Free Zone Authorities in UAE such as DMCC, Government Agencies, Banks and may be required by business owners or major investors.
Achieve transparency in performing External Audit:
Transparency of an External Audit is achieved by a demonstrable independence of the Auditors. There is no connection between the Auditors and the Company being audited beyond that of an independent service provider. The Auditor must have no stake in the results of the Audit or in the profitability of the Company. There are established limits to the non-audit activities an Auditor can provide. Auditors cannot be involved in Company’s bookkeeping, financial information systems, internal audits, management functions or human resources. These limitations combine with the accepted standards of Auditing to assure complete transparency of the audit process.
Primary responsibilities of an Auditor:
The first responsibility of an Auditor is impartiality. Individual Auditors and Audit Firms must have no stake in the results of an Audit. There must be no involvement with the Company being audited. There must be company-wide independence to ensure an objective review. The second responsibility of an Auditor is competency. The Auditors must be competent to perform the mandatory tasks and knowledgeable of the requirements and responsibilities that govern the Auditing activities. The rules will often vary according to the country where the audited company is active. It is beneficial that the Auditor have an understanding of the audited company’s business activities and the business sector in which it is active. A complete understanding of International Standards on Auditing (ISA) and International Financial Reporting Standards (IFRS) is required.
The responsibilities of an Auditor coalesce in the formal Audit Report. In the report, an opinion is expressed concerning the audited company’s financial reports. An unqualified opinion indicates reliability in the company’s financial reporting process. A qualified opinion indicates there may be issues with the company’s financial statements or that the Auditors did not have sufficient information to form an unqualified opinion. An adverse opinion indicates there is evidence the financial reports are misleading and cannot be trusted.
The benefits offered by DMCC to the Business Owners and Companies:
The Dubai Multi Commodities Centre is a free trade zone designed and built to support international commodities trading. Business in the DMCC is involved in trading diamonds, gold, tea and several other valuable commodities. The entire infrastructure of the DMCC is designed around the needs of international trading organizations and the companies that provide services to these companies. In addition to the benefits of a common commodities trading environment these free zone benefits are also featured:
1. The Centre is located very close to Jebel Ali Port which makes commodities shipping and trans-shipment quick and easy
2. The Free Zone offers 100% foreign ownership for businesses
3. There are no personal or corporate taxes
4. Funds transfer is easy – there are no currency restrictions
5. Full capital repatriation
6. Single or multiple shareholders permitted
7 Property ownership is allowed. Freehold, commercial and residential property is for sale or lease at reasonable rates.
DMCC Law specifying the need for External Audit:
External Audits are mandatory for all companies registered in the DMCC. The External Audit Report must be presented with the license renewal application each year. The normal reporting time interval is one year but a company can choose to be audited at between six months to eighteen months. The Auditor must be licensed by the UAE Ministry of Economy as well as registered with DMCC.
Requirement for Companies registered in DMCC to have an External Audit every year:
The DMCC requires an External Audit from registered Audit Firms as part of the renewal process for the business license. This requirement encourages companies to operate within the rules established by DMCC. The Annual External Audit will expose any inappropriate activities by the company and give the DMCC authorities reason to deny a business license. DMCC has a responsibility to its clients to provide a safe business environment free from corruption or unsuitable business practices. The External Audit is one of the tools the authorities have for this purpose. There is also a responsibility to protect UAE citizens from improper business activities and the External Audit is useful for that purpose as well.
Audit Requirements for DMCC Audit:
Audit requirements for a DMCC registered Company Audit are listed as follows:
- License of the Company
- Share Certificates
- Lease Agreement / Tenancy Contract
- Passport copies of Shareholders
- Bank statements
- Bank confirmation
- Trial Balance
- Management Accounts (if prepared such as balance sheet and income statement)
- Accounting ledgers of major accounting heads
- Supporting documents of transactions such as invoices, bills e.t.c.
- Gratuity schedule
- Prepayments and accruals schedules
- Depreciation and fixed assets schedule
- List of customers and suppliers
If the accounting of your business transactions is not done, please contact us to inquire about our professional accounting and bookkeeping services.
Who can do the External Audit of Companies registered in DMCC:
Only Audit Firms holding a UAE Auditing License as well as having registered with the DMCC are allowed to perform the required External Audits of DMCC registered companies. In 2014, the UAE laws were revised to make the requirements for registered Auditors much stricter. Auditors must have ongoing training to remain certified. An additional requirement of the new law is that companies registered in UAE have to change their Auditors every four years. Auditing companies must be managed and staffed by certified and qualified Auditors.
Benefits of an External Audit in addition to license renewal every year:
The benefits of an External Audit for DMCC registered companies go far beyond the annual license renewal. External Audits validate the management of the business by indicating the financial reports are accurate. In case of legal action by stakeholders in the Company, the External Audit Reports provide a solid foundation for defense against legal actions. The External Audit Report provides assurance to owners and investors that the Company is properly managed and operating effectively. This gives the upper management some feeling of security in their positions. A favorable audit report will go a long way toward gaining loan approval when banks are approached for expansion in capital.
How Arqaam Global can help in getting your External Audit done efficiently and effectively:
Arqaam Global is a Partnership owned by Professionally Qualified Chartered Accountants who have a wide experience in the areas of External Audit, Internal Audit, Accounting, Business Advisory, Financial Consultancy and Management Consultancy. Arqaam Global is a strategic Partner with a well known reputed Audit Firm of UAE, NUF Chartered Accountants which is also registered with DMCC and many other Free Zones of UAE. Our Audit Firm, NUF Chartered Accountants is also registered with all leading banks and financial institutions of UAE.
Our Group of Firms for Audit, Accounting and Consultancy Services means that we can serve you with a wide range of services, all from a single platform, executed by well trained and experienced Audit and Accounting Professionals. The External Audit service provided by our Group Firm NUF Chartered Accountants to the Companies registered in DMCC is accepted and recognized by all Government Authorities, other Free Zone Authorities and Banks of UAE.
