Companies in UAE are required to maintain proper books of accounts under International Financial Reporting Standards and the companies have to keep the record of accounts for 5 years. Some of the basic requirements related to bookkeeping, accounting, auditing and record keeping under Federal Law No. 2 of 2015 on Companies are stated as under:
Accounting Records
Article 26 of the Federal Law No. 2 of 2015 on Commercial Companies states that:
1- Every company shall keep accounting records showing its transactions to accurately reveal at any time the financial position of the company and enabling the partners or shareholders to confirm that the accounts of the company are properly kept in accordance with the provisions of this Law.
2- Every company shall keep its accounting books in its head office for a period of at least 5 (five) years from the end of the financial year of the company.
3- The company may keep an electronic copy of the original of the documents and records kept and deposited therein in accordance with the controls issued by a Ministerial Decision.
Accounts of the Company
Article 27 of the Federal Law No. 2 of 2015 on Commercial Companies states that:
1- Every Joint Stock Company or Limited Liability Company shall have one or more auditors to audit the accounts of the company every year. The other types of companies may appoint an auditor in accordance with the provisions of this Law.
2- The company shall prepare annual financial accounts including the balance sheet and the profit and loss account.
3- The company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts, to give a clear and accurate view of the profits and losses of the company.
4- Every partner or shareholder in any company may, based on a written request presented, obtain a free copy of the last audited accounts and of the last report of its auditor and a copy of the accounts of the group if it is a holding company. The company shall respond to such request within 10 (ten) days from the date of submittal thereof.
Financial Year of the Company
Article 28 of the Federal Law No. 2 of 2015 on Commercial Companies states that:
1- Every company shall have a financial year as determined in its Articles of Association, provided that the first financial year of the company shall not exceed 18 (eighteen) months, but at least 6 (six) months, to be calculated from the date of registration of the company in the Commercial Register with the competent authority.
2- The subsequent financial years shall consist of consecutive periods, each of 12 months commencing directly upon the expiry of the preceding financial year.