Audit and Assurance
Delivering reliable audit, compliance, assurance, and financial advisory solutions tailored to modern businesses.
Internal Audit
The role of internal audit is to provide independent assurance that an organization's risk management, governance, and internal control processes are operating effectively and efficiently. Internal audit objective is to enhance an organization's business practices. Internal Auditing is an activity carried on by the internal auditor to meet the management requirements of information. It is an independent appraisal activity within an organization for the review of operations as a service to the operation.
What Services Do We Cover?
Defining the Scope Internal Audit: Internal audit is carried out through various segments and the nature of the organization. The risk associated are financial risk, operational risk, regulatory, and compliance risk. The areas such as procurement, logistics, maintaining books of accounts, information technology, fixed assets, compliance human resource, payroll are assessed to conduct the audit.
Drafting the Risk Assessment Matrix: Risk Assessment Matrix (RAM) is used to define the risk category of each process and sub-processes or areas under the scope of Audit. The levels of risks are defined considering the likelihood or probability against the category of consequence and severity.
Risk-based Internal Audit Plan: A detailed Audit plan shall be drafted in discussion with the management and the areas to be prioritized depending upon the risk category and also the nature of function. Broad areas to be covered including, but not limited to, revenue, procurement of goods, inventory, logistics, information technology, finance, fixed assets, statutory compliance, admin and operations etc.
Execution of Approved Internal Audit Plan: On approval of internal audit plan, field work is to be executed by performing a walk-through, enquiry, assessment, verifications, questionnaire etc. Clients are kept informed of the audit process and the status of the audit.
Submission of Draft/Final Reports: Once the execution stage is completed, all the observations are collated in draft report. The risk rating is allotted to all observations with the responsibility of concerned functions. This report is discussed with the management or authorized persons to highlight the issues, concerns and deviations.
Follow-up and Action Taken Report: As it will be a continuous process, the scope doesn’t end with the submission of reports. The follow-up action taken report (ATR) will be represented to the management on the status of observations and its closure status. Any long-pending observations critical to the business will be brought into the notice of the management to set a further course of action. Independent review and appraisal of the organization’s financial and relevant operational activities will be better when the internal auditor is not part of organization and is independent.
External Audit
The external audit is an independent assessment of the company’s financial statements. Audits offer reassurance to the stakeholders that the company’s financial statements are free from material errors. External auditors are considered as unbiased professionals to analysis the company financial position & procedures. Getting the accounts audited from external auditors increases the credibility & reduces the risk of improper accounting entries in the accounting system.
What Services Do We Cover in External Audit?
Planning and Risk Assessment: It involves a comprehensive approach of understanding of the business and the business environment in which it operates, and using this information to assess whether there may be risk that could impact the financial statements.
Internal Control Testing: It involves a comprehensive approach of assessment of the effectiveness of an entity’s process of controls, concentrating on such areas as proper authorization, the safeguarding of assets, and the segregation of duties and responsibilities.
Substantive Procedures: It involves broad arrays of procedures, of which a small sampling is done with critical approach.
Reviewing of Management Prepared Financial Statements: As an independent auditor the financial statements prepared by the management are reviewed and crossed checked with different audit technique tools provided within auditing standards.
Issuing of Independent Auditor’s Report: An independent audit report is issued to the management after examining the books of accounts and financial statements of the company. The report can be unqualified report, qualified report, adverse report and disclaimer report based on audit findings.
Tax Return Preparation & filing
The tax returns have to be prepared according the guidelines set by Federal Tax Authority. The details of the revenue, cost, expenses, receivable, payables and taxes there off have to be submitted to FTA as per the deadlines set and within the tax period.
What Services Do We Cover in Tax Return Preparation & Filing??
Submitting Federal and State Tax Returns: Professionals handle preparation and submission, ensuring compliance with laws.
Optimizing Deductions and Credits: Identify opportunities to minimize tax liability through available deductions and credits.
Quarterly Tax Payments Estimation: Assist in calculating and making correct quarterly payments to the federal and state tax authorities.
Tax Planning and Strategy: Analyze financials, identify tax-saving opportunities, and provide appropriate strategic advice.
Virtual Representation in tax related Matters: Offer representation, respond to inquiries, and resolve tax-related disputes and questionnaire.
Analysis of Deductions and Credits: Thoroughly review financial records for all eligible deductions and credits available as per laws.
Year-Round Support: Continuous assistance with tax-related queries, concerns, and planning.
Adherence to Tax Deadlines:Ensure compliance with timely filing to avoid fine, penalties and interest.
Tax Audit Assistance: Guide through audits, represent interests, prepare documentation, and advocate for fair treatment.
Due Diligence
Due diligence service involves an expert opinion on every segments of the business environment where the business operates. It is especially provided to outside stakeholders to evaluate the business and to take decisions.
What Services Do We Cover?
Operational Due Diligence: Our team will conduct Operational Due Diligence which deals with non- financial matters of a business, this may include insurance and risk assessment, HR Activities, review of systems and process, evaluation of management team.
Financial Due Diligence: Our expert team will conduct financial due diligence to validate the financial statements. The goal of the process is to ensure that all stakeholders associated with the financial endeavor have the information they need to assess risk accurately. Also, financial due diligence helps to expedite the deals with fewer risks and capture and deliver value to stake holders.
Legal Due Diligence: Our expert team will investigate any legal risk associated with the target company’s rights and obligations. The issues involve intellectual property rights, employment disputes within the organization, and property ownership.
Macro-environment Due Diligence: We assess the major external and uncontrollable factors that influence an organization’s decision making and affects its performance and strategies.
Environmental Due Diligence: We assess the evaluation intended to identify environmental compliance and management system implementation gaps and related corrective actions.
Marketing Due Diligence: We evaluate the fundamental part of marketing plans and processes. It is conducted at various points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning and a review of a plan itself.
Production Due Diligence: We verify the production records such as production slips/memos to ensure that they are appropriately maintained. We also verify the logbooks of machineries to check the details of production.
Management Due Diligence: It is a systematic examination of the decisions and actions of the management to analyze the performance. Management audit involves the review of managerial aspects like organizational objectives, policies, procedures, structure, control, and system to check management’s efficiency or performance over the company’s activities.
Information System Due Diligence: We perform examination of the management controls within an Information Technology infrastructure. The evaluation of obtained evidence determines if the information systems are safeguarding assets, maintaining data integrity, and operating effectively to achieve the organization’s goals and objective. These reviews may be performed in conjunction with financial statement audit, internal audit, or another form of attestation engagement.
Fraud Investigation
Fraud Investigation Audit is investigating fraud which is very much required to identify the exact depth of committed fraud in the organization. The areas where the same has impacted. It is also very much necessary to identify the loop-holes or gaps due to which such Fraud took place. Fraud Investigation Audit would help a company in assessing the actual loss incurred to a company in terms of financial and non-financial aspects. A detailed fraud investigation report along with evidence could help a legal proceeding (if any) carried out against it.
What Services do we cover in Fraud Investigation?
Cash Theft
We investigate stealing cash from counters by destroying invoices or pocketing cash transactions as credit.
Forging Cheques
We investigate forged signatures on cheques and unauthorized withdrawals.
Manipulations
We investigate manipulation of supporting documents and accounting frauds.
Stealing Inventory
Investigation of stock and inventory pilferage by employees.
Asset Theft or Mis-appropriation
We investigate whether company assets are being used for personal benefit.
Reimbursement Fraud
Investigation of duplicate expense claims and forged reimbursement documents.
Payment Fraud
We investigate fake sales transactions used to earn unauthorized commissions.
Bribery
Investigation of bribery activities involving suppliers, vendors, and employees.
IT Fraud
We investigate IT fraud committed for personal benefit or unauthorized access.
Fake Suppliers
Investigation of fake suppliers and unauthorized vendor payments.
Payment to Dummy Employees
We investigate fake timesheets and payments during subcontracted services.
Fake Claims
Investigation of employees claiming personal expenses as company expenses.
Important Data Theft
We investigate theft of confidential customer and vendor information for resale or unauthorized use.
AML/CFT Compliance Services
Federal Decree Law No (20) of 2018 is a fundamental pillar of the UAE AML/CFT efforts. This Decree stipulated the establishment of:
- a committee dedicated to AML/CFT objectives, under the chairmanship of the Governor of the Central Bank of the UAE; and
- an independent Financial Information Unit (FIU) to receive and investigate all reports submitted by financial institutions and other corporate establishments regarding the suspected illicit financial activity.
As implemented by Cabined Decision No (10) of 2019, Federal Decree No. (20) of 2018 has raised the effectiveness of the AML/CFT legal and institutional framework of the nation, in line with FATF requirements and recommendations. The reporting and regulations under this Regulations have gained momentum with the introduction of the new GoAML Platform and strict guidelines from the regulator. It is mandatory for the following specified businesses to comply with the Regulations.
| Financial Institutions | DNFBP’s |
|---|---|
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What Services Do We Cover?
AML Policy & Procedures
- Designing, reviewing, and updating AML/CFT Policy and Procedures
- Drafting of AML/CFT Policy and Procedures Manuals
- Reviewing existing AML/CFT Policy and Procedures
- Drafting of Anti-Bribery and Anti-Corruption Policy
Risk Assessment & Profiling
- Review of customer risk assessment methodology.
- Assisting in development of customer risk assessment model considering NRA guidelines.
- Assisting in preparation of Risk Register – Risk identification and mitigation.
Compliance Assistance
- Assistance in registration on the GoAML Portal.
- Guidance to AML compliance officer for performing his day to day function.
- Assisting in conducting EDD for High-Risk customers.
- Assistance in preparation of statutory reports.
- Assistance in screening of customers and counterparty
- Conducting Audits/reviews as per statutory requirements, including agreed upon procedures Audit (AUP Audit)
- Assistance in preparation of documentation standards.
AML/CFT Health Checkup
- Conducting AML/CFT awareness program for staffs
- Conducting AML/CFT awareness program to senior management and board of directors.
- Conducting role specific awareness programs covering Screening, Transactions monitoring, Due Diligence, etc.
- Topics covered under AML/CFT awareness program includes; Money Laundering, Terrorist Financing, ML/TF – Methods and Techniques, Stages of Money Laundering Roles and responsibilities of CO/MLRO/and ACO/Deputy MLRO, Scope of internal controller/auditor pertaining to AML framework, Financial Action Task Force (FATF) – 40 Recommendations, International guidelines – EU, UN, EGMONT, etc., AML UAE laws and regulatory guidelines, Risk-based approach for AML
IEconomic Substance Regulation (ESR) Services
Economic Substance Regulations (ESR) Dubai, UAE was brought out via Resolution 31 of 2019 in April of the same year. The Economic Substance Regulation serves as a guideline for improving the nation’s tax frameworks and will make companies more accountable for maintaining an economic presence in the UAE. The Economic Substance Regulations (ESR) ensure that all eligible Onshore and Free Zone entities will demonstrate adequate economic presence within the UAE.
Let us now take a closer look at the Economic Substance Dubai guidelines, and why they are so useful.
- Security and Confidentiality
- Cost-Effectiveness
- Evaluates Risks and Protects Assets
Why has the UAE introduced Economic Substance Regulations?
The UAE introduced the Economic Substance Regulations to reiterate its commitment towards the OECD Inclusive Framework, of which it is a part. ESR in UAE came out as a result of the assessment the country underwent by the EU Code of Conduct on Business Taxation. Introducing the Economic Substance Regulations UAE helped the country get off the EU blacklist regarding taxation. The Economic Substance Regulations Dubai also helped the country improve its taxation.
When did the economic Substance regulations enter into force?
The UAE brought into force Economic Substance Regulation UAE via a Cabinet of Ministers Resolution on April 30th, 2019. The government further released a Ministerial Decision containing guidance on how to apply these regulations on September 11th, 2019. After consulting with the EU and OECD, the UAE made amendments to the ESR in UAE. These were brought into force via a Cabinet of Ministers Resolution on August 10th, 2020. Additional guidance regarding the amendments came out through a Ministerial Decision, which was the 100th of the year. The ESR compliance UAE received a broader definition through this Amended Guidance which had a detailed guide on the Relevant Activities for ESR.
Who are the regulatory authorities?
- Ministry of Economy
- Central Bank
- Insurance Authority
- Security and Commodities Authority
What are relevant activities?
The Relevant Activities as per the Economic Substance Regulations UAE are businesses which engage in the following activities:
- Banking
- Insurance
- Investment Fund Managementy
- Lease-Finance
- Headquarters Businesses
- Shipping
- Holding Company
- Intellectual Property
- Distribution & Service Centre
UAE businesses which work in the sectors mentioned above must use Substance Over Forms to determine whether they are eligible for the ESR guidelines. To do so, businesses must assess all the activities they performed in one financial year, and not just the ones mentioned on their commercial license. Also, as per the Economic Substance Regulations UAE, businesses need not be actively engaged in these categories to be eligible for ESR. Even a passive income through a finance lease makes the business liable to follow ESR in UAE. ESR compliance UAE mandates that businesses who carry out multiple relevant activities must demonstrate economic substance for each one. In some cases, ESR in Dubai allows companies to consolidate their ancillary Relevant Activities to prevent multiple or duplicate reporting.
Who is a Licensee?
A Licensee is any juridical person, or unincorporated business or partnership registered and eligible for ESR in UAE. Hence, it includes all individuals, persons, and partnerships that engage in a Relevant Activity in the UAE. Hence, as per Economic Substance Regulations UAE, a License may be any one of the following;
- Limited Liability Company
- Private Limited Company
- Public Limited Company
- Joint Venture Company
- Partnership Firm
However, as per Economic Substance Regulations Dubai, the following persons do not fall under the category of Licensee;
- Natural Person
- Sole Proprietorship
- Trust
- Foundation
What does it mean subject to the Regulations?
When a notice says, subject to the Economic Substance Regulations UAE, it means the following;
- All Licensees that engage in and generate an income from a Relevant Activity must file an annual Notification. As per ESR in Dubai, such a notification must reach the Regulatory Authority six months before the end of the fiscal period.
- Additionally, to maintain ESR Compliance UAE eligible licensees must file an Economic Substance Report. As perEconomic Substance Dubai guidelines, the licensees must do so within 12 months from the end of the determined period.
- When it comes to demonstrating substance, for every period a Licensee generates income via a Relevant Activity, it must fulfill an Economic Substance Test.
An Economic Substance Test will need the Licensee to demonstrate the following as per Economic Substance Regulations Dubai;
- All the Licensee’s Relevant Activities are directed and managed within the UAE
- All the Core Income Generating Activities occur within the UAE
- Licensee hires enough people, has adequate remises and meets the expense criteria in the UAE as per the Economic Substance Regulation UAE
Who is subject of Economic Substance Regulations UAE?
The Economic Substance Regulation UAE applies to all business entities and partnerships that engage in a Relevant Activity within the UAE. They apply throughout the country, in both Free Zones and Financial Free Zones alike.
Hence, ESR in Dubai extends to all entities located onshore and in Free Zones in case they generate an income from a Relevant Activity. For instance, ESR compliance with UAE regulations in the DIFC extends to all entities that conduct a Relevant Activity within the jurisdiction of the DIFC.
This is regardless of their business structure type or operational size. Hence, the DIFC serves as the Regulatory Authority and enforcer of the Economic Substance Regulations Dubai in its zone. Since branches registered in the UAE act as an extension of the primary or parent branch, they do not have a separate legal existence.
Hence, if the parent company is in the UAE, it must file one composite Notification and Report containing details of all its branches. However, a branch of a foreign entity must comply with the Economic Substance Regulations UAE, unless the income falls under taxation of the head office jurisdiction.
This test is met when the branch’s income is used to calculate the patent office’s taxable income. Also, when the branch is registered outside the nation, the entity does not have to consolidate its activities to comply. However, this holds only if the income from the foreign branch faces taxation under a foreign jurisdiction. Additionally, the Economic Substance Regulations Dubai acts on entities belonging to foreign multinational groups.
What is reportable period for Economic Substance purposes?
As per ESR in Dubai, the Reportable Period serves as the financial period, which begins from January 1st, 2019. All entities must include their start and end dates while mentioning their Reportable Period on the MOF Portal. Let us now consider a few examples which highlight the Reportable Period for Economic Substance Regulation UAE purposes.
Any business whose Incorporation Date falls on February 10th, 2010 and has a financial year-end on December 31st, will have the following Reportable Period: Start date: January 1st, 2019 End date: December 31st, 2019
Any business whose Incorporation Date falls on July 1st, 2019 and has a financial year-end on March 31st, 2020 will have the following Reportable Period: Start date: July 1st, 2019 End date: March 31st, 2020
Any business whose Incorporation Date falls on June 1st, 2018 and has a financial year-end on December 31st, 2019 will have the following Reportable Period: Start date: January 1st, 2020 for any period after January 1st, 2019 End date: December 31st, 2020
What Services Do We Cover in ESR?
Consultancy services regarding ESR guidelines
Helps companies identify whether they qualify for Economic Substance Regulation
Identify which business segments qualify for ESR compliance
Report and help achieve ESR readiness with ease
Facilitate and help with ongoing Economic Substance Regulation compliance
Secretarial services and record maintenance for ESR compliance
Economic Substance Regulation filing in the proper format