The Jebel Ali Free Zone Authority (JAFZA) is one of many autonomously controlled economic zones in the UAE. Each of these zones provides a very business-friendly environment and actively promotes the establishment of new businesses inside the zone's controlled territory. Each free zone is overseen by a distinct entity that issues and enforces business permits and regulations inside the zone. Businesses operating outside of the zones but within the UAE will be subject to additional regulations. All free zone authority regulations are intended to protect UAE citizens from unethical business practices; to ensure that all businesses operating within the zone adhere to common rules of interaction with one another and with the rest of the world; and to protect shareholders from fraudulent business practices. The external audit obligation is one of these requirements. Businesses in JAFZA must renew their business licenses on a yearly basis. Every business must have its finances audited by one of the audit companies on the JAFZA certified auditors list as part of the renewal procedure. This audit will ensure that the company's financial statements are honest and correct, and that no fraudulent actions are being concealed by misleading financial reports.
The Implementing Regulations Number 1/99 provide the formal guidelines governing external audits. Clause 51 of this rule requires all companies in the Jebel Ali Free Zone to select auditors from a list of approved auditors. In reality, audit companies with a valid professional license from the Economic Department are deemed qualified to conduct the needed audit. The designated auditor must prepare an audit report of the company's annual accounts and send it to the company's shareholders.
The annual financial report of the firm must be signed by the directors or on their behalf, according to clause 49 of the legislation. At least one director must sign the balance sheet, making it the company's official financial condition.
Clause 50 mandates that a copy of the annual accounts (together with the auditor's report) be given to the FZCO Department within three months of the fiscal year's end. In exceptional cases, that period can be extended with the authority's agreement
Additional guidelines govern the nomination of an approved auditor as well as the required substance of the auditors' report. The audit report must provide the auditor's view on whether the statements represent an honest and truthful portrayal of the company's finances. The auditor must review the company's financial operations to ensure that the accounts comply with the Implementing Regulations. It further specifies that a signed copy of the report, together with the annual company accounting report, shall be sent to the Free Zone Establishment authority.