Everything You Need to Know About Corporate Financial Reporting in the UAE
Financial reporting in UAE
Financial reporting in UAE provides information about the company’s financial position, performance, and cash flows. They are used by investors, creditors, and other stakeholders to make decisions about the company.
In the UAE corporate financial reporting requirements are governed by the Companies Law and the UAE Accounting Standards Board. The Companies Law requires all companies to prepare annual financial statements. However, only certain types of companies are required to have their financial statements audited. Click here to know about Ministerial Decision No. 114 of 2023 on the Accounting Standards and Methods for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
Financial reporting in UAE encompasses various aspects of auditing, compliance, and transparency. It involves the preparation and disclosure of financial statements in accordance with established standards and reporting frameworks, such as International Financial Reporting Standards in UAE and Generally Accepted Accounting Principles (GAAP). Companies in the UAE are required to follow regulatory requirements and ensure accurate and transparent financial reporting. This includes the consolidation of financial information, adherence to accounting principles, and the proper disclosure of relevant information. Financial reporting plays a vital role in corporate governance, providing stakeholders with essential insights into a company’s financial performance and position.
The accounting standards that must be followed in the UAE are:
- The International IFRS Financial Reporting in UAE
- The UAE Generally Accepted Accounting Principles (UAE GAAP).
The IFRS are a set of international financial reporting standards in UAE that are used by companies all over the world. The UAE GAAP are a set of accounting standards that are specific to the UAE.
Companies that are listed on the Dubai Financial Market (DFM) are required to follow the IFRS. Other companies may choose to follow the IFRS or the UAE GAAP. However, if a company chooses to follow the UAE GAAP, their financial statements must be reconciled to the IFRS.
The filing deadlines for audited financial statements in UAE vary depending on the type of company. However, most companies are required to file their audited financial statements in UAE within 6 months of the end of their financial year.
The filing deadlines are as follows:
- Listed companies: 4 months after the end of their financial year
- Publicly traded companies: 6 months after the end of their financial year
- Private companies: 9 months after the end of their financial year
Financial statement requirements in UAE:
The following are financial statement requirements in UAE:
- The financial statements must be prepared in accordance with the IFRS or the UAE GAAP, whichever is applicable.
- The financial statements must be audited by a qualified auditor who is registered with the Ministry of Finance.
- The financial statements must be filed with the Ministry of Economy within 6 months of the end of the company’s financial year.
- Companies that fail to comply with the UAE corporate financial reporting in UAE may face penalties, such as fines or imprisonment.
Financial reporting in UAE: All Your Questions Answered
Q: What entities are required to have their financial statements audited in the UAE?
- Listed companies: All companies that are listed on the Dubai Financial Market (DFM) are required to have their financial statements audited.
- Publicly traded companies: All companies that are publicly traded, regardless of whether they are listed on the DFM, are required to have their financial statements audited.
- Companies with a paid-up capital of AED 50 million or more: All companies with a paid-up capital of AED 50 million or more are required to have their financial statements audited.
- Companies that are involved in certain sensitive activities: Companies that are involved in certain sensitive activities, such as banking, insurance, and financial services, are also required to have their financial statements audited.
Q: Which accounting standards are used in the UAE?
A: The accounting standards that must be followed in the UAE are the International IFRS Financial Reporting in UAE and the UAE Generally Accepted Accounting Principles (UAE GAAP).
Q: When are audited financial statements due in the UAE?
A: The filing deadlines for audited financial statements in UAE are different for different types of companies. However, most companies must file their audited financial statements within 6 months of the end of their financial year.
Q: What happens if a company fails to comply with the corporate financial reporting requirements?
A: Companies that fail to comply with the corporate financial reporting in UAE may be penalized, with the severity of the penalty depending on the nature of the violation.
Q: Why is it important for companies to comply with the corporate financial reporting requirements?
A: There are several reasons why it is important for companies to comply with the UAE corporate financial reporting requirements. These reasons include:
- To provide accurate and transparent information to investors and other stakeholders.
- To protect the interests of investors and other stakeholders.
- To comply with the law.
- To avoid penalties.
- To improve the company’s reputation.
Q: What are some of the challenges that companies face when complying with the corporate financial reporting in UAE?
A: The following are the challenges that companies face when complying with the corporate financial reporting requirements:
- The cost of complying with the requirements can be high.
- The requirements can be complex and time-consuming to implement.
- The requirements may not be well-suited to the specific needs of the company.
- The company may not have the necessary expertise to comply with the requirements.
If you have any questions or need help with corporate financial reporting in UAE, please contact Ahmed Mahfoudh Chartered Accountants & Auditors. We are a leading accounting and auditing firm with years of experience in the UAE. We offer a wide range of services to help businesses comply with the corporate financial reporting requirements, including auditing, consulting, and training.
We also offer a number of other services, such as:
You can contact us by phone or by WhatsApp. We would be happy to answer your questions and help you get started with corporate financial reporting in UAE.