Year-End Audit Readiness: SME Checklist for Dubai & Riyadh

Audit season does not have to be chaotic. SMEs in Dubai and Riyadh that prepare systematically — ideally starting two to three months before year-end — finish faster, receive cleaner management letters, and pay significantly less in additional audit fee hours caused by incomplete records or surprise adjustments.

This checklist is built on the recurring findings in management letters from SME audits across the UAE and Saudi Arabia. Work through each step before your auditors arrive.

Step 1: Reconcile All Bank Accounts — Including Foreign Currency Accounts

Every bank account your business holds should be reconciled to the general ledger with no unreconciled items older than 30 days by the time your year-end arrives. For UAE companies with USD or EUR accounts (common for importers and exporters), translate balances at the year-end exchange rate and post FX revaluation adjustments in the accounting system before your auditors begin fieldwork. Auditors will request reconciliations on day one — having them ready signals strong financial controls.

Step 2: Confirm Inventory Count Procedures

If your business holds physical stock, your auditor is required under ISA 501 to attend — or arrange for alternative procedures around — a physical inventory count. Coordinate the count date with your audit firm early. Common problems:

- Consignment stock counted as owned inventory — segregate consignment goods and label them clearly before the count - Obsolete or damaged items — write these down before year-end, not after audit starts; auditors will test net realisable value (NRV) - Cut-off errors — goods received just before year-end should be recorded in the year; goods received after should not

Step 3: Document Related-Party Transactions

This is the step most GCC SMEs skip — and the one that generates the most management letter findings. Related-party transactions are pervasive in UAE and Saudi businesses: shareholder loans, shared premises with a sister company, intercompany management fees, goods purchased from a related supplier.

Under IAS 24, your financial statements must disclose all material related-party transactions, balances, and terms. Auditors will request a full list of related parties and will verify transactions independently. Prepare this list before fieldwork — it should include all companies under common ownership or control, shareholders, directors, and key management personnel.

TODO for ISZ team: Add a note here about a typical related-party finding from a UAE manufacturing or trading company audit engagement — e.g. undisclosed loans from a shareholder treated as revenue or accrued expenses.

Step 4: Reconcile VAT Returns to the Accounting Records

In UAE audits, the external auditor increasingly performs a reconciliation between reported VAT returns and the general ledger revenue and expense figures. Unexplained differences are an immediate audit finding. Before year-end:

- Confirm total revenue per the accounting system matches total output tax supplies per filed VAT returns for the year - Reconcile input tax claimed on returns to AP records and expense journals - Identify and document any adjustments, late-registered purchases, or output tax corrections

This single step prevents one of the most common audit adjustments for UAE SMEs.

Step 5: Review Revenue Recognition Policies

UAE SMEs in services, construction, and SaaS face revenue recognition complexity that is often underestimated. Under IFRS 15, revenue is recognised when — or as — performance obligations are satisfied. Common issues:

- Advance payments and retentions: Is the cash received in your bank account actually revenue yet, or a contract liability? - Long-term contracts: Are you recognising revenue using an appropriate method (percentage of completion, output method) supported by evidence? - Multi-element arrangements: If you sell both a product and an annual maintenance contract in one deal, the revenue should be allocated to each element separately

Step 6: Prepare the Year-End Fixed Asset Register

Update your fixed asset register (FAR) before year-end: additions, disposals, depreciation charges, and any impairment indicators. In the UAE, fit-outs and leasehold improvements are frequently capitalized informally — ensure all assets are recorded, classified correctly, and that fully depreciated assets that are still in use are noted (they may indicate impairment of carrying values on other assets).

Step 7: Provide for End-of-Service Gratuity (EOSB)

UAE Labour Law mandates end-of-service gratuity for employees upon termination. This is an unfunded defined benefit that must be accrued on your balance sheet under IAS 19 (or a simplified basis for SMEs). Many Dubai SMEs do not maintain an EOSB provision at all — or maintain it only for employees who have worked more than one year — which creates a material understatement of liabilities. Before year-end, calculate and record the correct EOSB provision for all qualifying employees.

Step 8: Close Out Prior-Year Management Letter Findings

Pull out last year's management letter (or audit report) and check the status of each finding. If your auditor flagged a control weakness twelve months ago and it is still open, expect them to elevate it to a significant deficiency and include it in the current-year report. Resolved findings should have evidence of closure — updated policies, system configuration changes, or training records.

Before Fieldwork: Prepare Your PBC List in Advance

Ask your audit firm for their Provided-By-Client (PBC) list — the list of schedules, reconciliations, and documents they will request — before fieldwork begins, not on day one. Most experienced audit firms will share this 2–4 weeks in advance. A business that has 80% of the PBC list ready when auditors arrive saves significant time and fee hours.

ISZ Global lists verified audit firms and independent reviewers across Dubai, Abu Dhabi, Sharjah, Riyadh, and Jeddah. Browse our directory to find a firm that fits your size, sector, and reporting timeline.