Statutory Audit
Definition
Audit required by law (free zone bylaws, Corporate Tax thresholds, banking covenants) rather than one undertaken voluntarily. Bookkeeping packages include Statutory Audit Support so books are audit-ready when the firm arrives.
What it is
A Statutory Audit is an external audit mandated by law or regulation rather than chosen voluntarily by management. In the UAE, statutory audit is required by free-zone bylaws (DMCC, DIFC, ADGM, JAFZA, RAKEZ), by FTA Corporate Tax rules for QFZP relief and entities above AED 50m revenue, and by banking covenants on credit facilities. The auditor must be a UAE-licensed independent firm, and the audit is conducted under International Standards on Auditing (ISA).
Key characteristics
- Trigger
- Law, regulation, or contract — not management choice
- Standard
- International Standards on Auditing (ISA)
- Auditor
- Independent UAE-licensed firm
- Output
- Audit Report on IFRS Financial Statements
Why it matters
Statutory audit deadlines drive the entire UAE finance calendar. Missing them blocks license renewal, loses QFZP relief, and triggers bank-covenant defaults — far more expensive than the audit fee itself.
FAQs
- What's the difference between statutory and voluntary audit?
- Statutory is mandatory — required by law, regulation, or contract. Voluntary is by choice — typically commissioned for investor due-diligence, M&A preparation, or internal assurance. Both follow the same ISA standards; the trigger and the deadline pressure are different.
See also
- External Audit
- Audit Report
- Bookkeeping
- IFRS(International Financial Reporting Standards)
