Difference Between Statutory Audit and Regulatory Audit in the UAE
Statutory Audits
A statutory audit is one that must be performed by law. Statutory audits are commonly carried out by an autonomous auditor and are required to be executed in compliance with precise auditing criteria.
A statutory audit's purpose is to assure stakeholders that the company’s financial statements are accurate and fair. Statutory audits have the potential to detect and prevent fraudulent activities and other financial misdemeanours.
In line with Federal Law No. 32 of 2021 on Commercial Companies, it is mandatory for all companies operating within the mainland of the United Arab Emirates to undergo financial account auditing. Furthermore, to adhere to the stipulated regulations, companies in the UAE are required to maintain their financial records for a minimum of five years.
Regulatory Audits
A regulatory audit is carried out by a governmental agency to verify that a company is adhering to relevant laws and regulations. Such audits are usually conducted periodically and may be either scheduled or unscheduled.
The primary objective of a regulatory audit is to safeguard the welfare of the general public by verifying that corporations are conducting their operations in a secure and stable manner. Additionally, regulatory audits serve as a means to detect and prevent fraudulent activities and other financial misdemeanours.
Difference between regulatory & statutory audits
The ensuing differentiation may facilitate comprehension of the distinction between Regulatory and Statutory Audits.
Purpose:
Statutory audits are conducted to provide assurance to stakeholders that the company's financial statements are accurate and fair.
Regulatory audits are carried out with the purpose of verifying that companies are adhering to the relevant laws and regulations.
Conducted By:
Independent auditors are usually responsible for conducting statutory audits, while government agencies are typically responsible for conducting regulatory audits.
Scope of the Audit
In general, statutory audits encompass all facets of a corporation's financial statements. Conversely, regulatory audits concentrate on a corporation's adherence to particular laws and regulations.
Frequency of the audit
Statutory audits are usually conducted annually.
Regulatory audits are usually conducted on a periodic basis.
Contact J N J Auditing LLC to get a comprehensive advisory for your Audit requirements and get compliant with the law.
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Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.