Compliance Audit

There is no single federal law mandating a standalone 'compliance audit' for every UAE company. What is mandatory are the underlying obligations a compliance audit tests — VAT and Corporate Tax filing where registered, WPS payroll compliance, and AML/CFT programme requirements for Designated Non-Financial Businesses and Professions. DIFC and ADGM regulated entities may face additional DFSA or FSRA reporting expectations. The compliance audit itself is typically a voluntary, proactive exercise commissioned by the board or driven by a lender, investor, or licence-renewal requirement.

Statutory audit expresses an opinion on whether the financial statements present a true and fair view, for shareholders and the licensing authority. A compliance audit is narrower and obligation-specific — it tests whether named regulatory requirements (VAT accuracy, WPS timeliness, AML/CFT programme adequacy) are being met in practice, independent of whether the financial statements as a whole are fairly presented. A company can pass its statutory audit and still have live compliance gaps a compliance audit would surface.

Internal audit is broader — it covers financial, operational, IT, and compliance risk across a risk-ranked universe of processes, reporting to the audit committee or board on the overall control environment. A compliance audit is anchored specifically to named legal, regulatory, or contractual obligations and tests whether each is being met, obligation by obligation. In practice the two often overlap, and many PNPC engagements combine elements of both depending on what the client actually needs.

A VAT compliance audit reconciles filed EmaraTax VAT returns against the general ledger, tests a sample of input VAT recovery decisions for correct classification, checks that output VAT has been correctly charged and reported on relevant supplies, and reviews the documentation supporting any zero-rated, exempt, or reverse-charge positions taken. It is testing under Federal Decree-Law No. 8 of 2017 and current FTA guidance, applied to the entity's actual transaction records rather than a general commentary on VAT awareness.

Yes, where the entity is registered for Corporate Tax. We test whether the Tax Registration Number is current, whether related-party transactions are properly documented and priced on an arm's-length basis where the related-party rules apply, and — for free zone entities claiming the 0% rate on qualifying income — whether the conditions for Qualifying Free Zone Person status are being tracked and evidenced on an ongoing basis rather than assumed. Corporate Tax applies at 0% on taxable income up to AED 375,000 and 9% above that threshold for standard taxpayers, effective for financial years starting on or after 1 June 2023.

The Wage Protection System (WPS) is the electronic salary transfer system mandated by the Ministry of Human Resources and Emiratisation (MOHRE) to track timely, accurate payment of wages through registered UAE banks or exchange houses. A compliance audit reconciles the payroll register against actual WPS submission records and salary transfer timing, since non-compliance can trigger MOHRE penalties and, in serious or repeated cases, restrictions on a company's ability to process new work permits.

Certain UAE businesses — including real estate brokers and agents, dealers in precious metals and stones, and independent legal or accounting professionals providing specified services, among others — fall within the DNFBP category under Cabinet Decision No. 10 of 2019 and must maintain AML/CFT policies, perform customer due diligence, and register on the goAML platform maintained by the UAE Financial Intelligence Unit. A compliance audit tests whether these controls are genuinely operating — sampling actual customer files for evidenced due diligence, not just confirming the policy document exists.

Yes. Lenders increasingly build compliance representations into facility agreements, and free zone authorities require current licence and filing status for renewal. A compliance audit run ahead of the renewal date identifies and helps remediate gaps — a lapsed filing, an outdated registration detail, an unresolved MOHRE query — before the renewal process itself surfaces them and creates delay or additional scrutiny.

Yes, for entities regulated by the DFSA (DIFC) or FSRA (ADGM), a compliance audit can be scoped to test the specific rulebook provisions applicable to that firm's licence category — prudential reporting, conduct requirements, and any client-money or capital-adequacy conditions relevant to the category held. This is scoped in close coordination with the client's existing regulatory advisor where one exists, to avoid duplicating specialist regulatory compliance work already underway.

We flag this immediately rather than waiting for the final report, and recommend the client's tax advisor assess whether a voluntary disclosure via the EmaraTax portal is the appropriate corrective step, given that timely voluntary disclosure is generally treated more favourably than an error later identified through an FTA audit or enforcement action.

A focused single-obligation review — for example, WPS compliance alone, or a VAT filing accuracy review — can often be completed within a few weeks once records are made available. A multi-obligation review spanning tax, payroll, and AML/CFT for a DNFBP, or a review across several legal entities in a group, takes longer given the volume of filings and customer files that need to be sampled. PNPC confirms a specific timeline in the engagement letter once scope is agreed rather than quoting a generic figure.

PNPC agrees a fixed fee for each defined compliance audit engagement, confirmed in writing before fieldwork begins. Fee depends on the number of obligations in scope, the number of legal entities under review, and the volume of records and customer files that need to be sampled — a single-obligation review costs meaningfully less than a multi-obligation review across a group structure.

Yes. A compliance audit occasionally surfaces a finding that points to a broader control weakness beyond the specific obligation tested — for example, a pattern of vendor master changes surfacing during a VAT input-recovery sample that suggests a wider procurement control gap, or a customer due diligence gap that raises a fraud-risk concern. Where that happens, we recommend escalating to a broader internal audit or, where a specific irregularity is suspected, a dedicated forensic investigation with a different evidentiary standard.

Yes, with management's consent. Where a client already has a tax advisor handling VAT and Corporate Tax filings, or an external statutory auditor, we coordinate to avoid duplicated testing and to make sure any compliance audit finding relevant to an upcoming filing or audit is flagged to the right advisor promptly.

Yes. PNPC operates from offices in the UAE (Dubai) and India (Chennai, Bangalore, Hyderabad), and for groups with cross-border structures we run compliance audits that specifically test related-party transaction documentation and transfer pricing consistency across both jurisdictions under one coordinated engagement, rather than splitting the review between two disconnected advisors.

PNPC scopes every compliance audit from an obligation map specific to the entity's actual licence type, registrations, and sector — not a templated checklist applied regardless of what genuinely applies. Our findings are backed by sample testing against actual filings, payroll records, and customer files, not assertions that a policy exists. We escalate serious gaps immediately rather than holding them for a final report, and we track remediation to completion rather than treating the report as the end of the engagement.