As a world-class international financial centre, Abu Dhabi Global Market (ADGM) has set a high bar for corporate governance, transparency, and financial reporting. Companies operating within ADGM are required to meet stringent standards to maintain their good standing and ensure that their financial statements reflect accuracy, accountability, and integrity.

When it comes to preparing your company’s annual accounts, getting the numbers right is just the beginning. From currency denomination standards to ensuring the right signatures are in place, each compliance detail plays a crucial role in shaping the accuracy, credibility, and reliability of your financial reporting. Whether you’re a startup or an established enterprise, meeting these key requirements isn’t just compliance —it’s about building trust with investors, aligning with international standards, and setting the stage for future growth.

Explore the key aspects of ADGM annual account compliance requirements.

1. Currency Denomination: Accounts Must Be in USD

One of the fundamental requirements for preparing annual accounts is that all financial statements must be denominated in U.S. Dollars (USD). This standardization ensures consistency and comparability, particularly for companies that operate across borders or engage with international stakeholders. Presenting accounts in USD helps to avoid currency translation issues and provides a clearer picture of financial performance on a globally recognized scale.

Key Points to Consider:

• Consistency: All transactions, assets, liabilities, income, and expenses should be recorded in USD.
• Conversion Rates: For companies dealing in multiple currencies, it’s essential to use consistent exchange rates and disclose the rates used in the notes to the accounts.
• Regulatory Compliance: Adhering to USD denomination aligns with international accounting standards, particularly for companies registered in jurisdictions that mandate USD for financial reporting.

2. Balance Sheet Signatures: Director’s Responsibility

The balance sheet is one of the most critical components of the annual accounts, providing a snapshot of the company’s financial position at a specific point in time. To ensure accountability and authenticity, the balance sheet must be signed by a director of the company, with the director’s name clearly stated. This requirement highlights the director’s role in overseeing financial accuracy and attests to the reliability of the information presented.

Key Points to Consider:

• Legal Accountability: The director’s signature on the balance sheet signifies that the accounts have been reviewed and approved by the company’s management.
• Transparency: Including the name of the signing director fosters transparency and reinforces stakeholder confidence in the company’s financial disclosures.
• Documentation: The signed balance sheet should be properly archived as part of the company’s official records.

3. Audited Accounts: Director’s Report Signature

For audited accounts, the Director’s Report is a critical narrative that accompanies the financial statements, providing insights into the company’s performance, strategy, and outlook. This report must be signed by a director or the company secretary, with the name of the individual clearly stated. This requirement ensures that senior management takes ownership of the content, emphasizing the importance of the report in providing context to the figures presented.

Key Points to Consider:

• Clarity and Accountability: The Director’s Report outlines the key activities, risks, and governance matters of the company, and its authenticity is validated through the signature.
• Insightful Information: It provides shareholders and other stakeholders with a comprehensive view of the company’s operations beyond the numbers.
• Compliance: The signature requirement ensures that the report complies with relevant corporate governance standards.

4. Auditor’s Report: Naming the Audit Firm and Senior Auditor

The Auditor’s Report is a crucial element of the annual accounts, offering an independent evaluation of the company’s financial statements. This report must include the name of the audit firm and the senior auditor responsible for the audit. Naming the audit firm and the senior auditor adds credibility to the financial statements and assures stakeholders of the rigor of the audit process.

Key Points to Consider:

• Independence and Assurance: An external audit provides independent verification of the company’s financial statements, enhancing their credibility.
• Transparency: Naming the audit firm and the senior auditor offers transparency and accountability, especially in case of any discrepancies or audit qualifications.
• Professional Standards: The inclusion of the audit firm and auditor’s names aligns with international auditing standards and fosters trust among investors and regulators.

Ensuring ADGM Annual Accounts Compliance with Expert Guidance from MS

Understanding the complexities of ADGM annual accounts compliance requirements can be daunting, but MS is equipped to make the process seamless and stress-free. At MS, we offer specialized support to help your company meet all ADGM compliance standards for annual accounts preparation. With our comprehensive approach, you can avoid compliance pitfalls, streamline your annual reporting, and strengthen the credibility of your financial statements. Trust us to be your partner in compliance, ensuring that your ADGM annual accounts are prepared with precision and in full alignment with regulatory expectations.

Today, compliance is far more than a box to tick. Companies that master the art of regulatory adherence don’t just avoid penalties; they thrive, gaining the trust of stakeholders and reinforcing their reputation in a competitive landscape. Compliance, especially in financial reporting, demands a sharp eye for detail and a forward-thinking strategy, turning what may seem like an obligation into a powerful tool for growth.

At the forefront of regulatory adherence is the Abu Dhabi Global Market (ADGM), a visionary force in the UAE known for its rigorous standards and commitment to transparency. For companies and LLPs registered under ADGM, the preparation of annual accounts is not just a routine task. These financial statements, thoroughly prepared in line with International Accounting Standards (IAS), provide a clear lens into a company’s fiscal health, offering critical insights for both internal decision-makers and external stakeholders.

With the September 30th deadline for submitting these accounts fast approaching, businesses must understand the audit process with care and precision, ensuring that their financial records not only meet ADGM’s regulatory requirements but also stand as a testament to their financial integrity.

In light of the RA’s 2023 assessments, it is crucial for company directors, especially those serving on audit and risk committees, along with audit partners, to carefully scrutinize and approve the ongoing audit work on company accounts.

Accurate, timely, and insightful corporate reporting is fundamental to the proper functioning of capital markets, investor confidence, and the protection of public interests. The RA places a strong emphasis on high audit quality as a regulatory priority and may hold audit firms, audit principals, and company directors responsible for any deficiencies in the preparation or auditing of financial statements.

Key Findings by ADGM Annual Audit 2023 on How Audits Can Go Wrong

ADGM’s commitment to maintaining a strong regulatory environment extends to its audit requirements. Companies must align their audit practices with ADGM’s stringent standards, which prioritize several key areas:

1. Tailored Audit Approaches: One of the most critical aspects of an ADGM audit is the use of methodologies tailored to incorporate ADGM’s specific requirements. Limited or improper application of these methodologies can lead to significant gaps in the audit process, particularly concerning financial statement disclosures. Utilizing a financial statement disclosure checklist that factors in ADGM requirements is essential for ensuring accuracy and completeness.
2. Strategic Audit Planning: A well-structured audit begins with strategic planning. However, common issues such as inadequate understanding of the entity, its environment, and risk factors can hinder the audit process. Effective planning procedures, including a comprehensive risk assessment, are crucial for identifying potential challenges early in the audit process and ensuring all relevant areas are covered.
3. Revenue Verification: Revenue is often a focal point in financial audits, and ADGM audits are no exception. Insufficient audit evidence on key audit assertions can arise from weak audit tests and inadequate planning. Ensuring robust audit tests and well-documented procedures can mitigate these risks, providing a clearer and more accurate representation of the company’s financial performance.
4. Comprehensive Group Audits: For companies operating as part of a group, group audits present additional complexities. Common challenges include inadequate work by the group auditor, especially in areas such as scoping, materiality, and communication with component auditors. To address these issues, group auditors must establish clear communication channels and ensure a thorough understanding of the component auditors’ work.
5. Thorough Journals Testing: Journals testing is a critical component of any audit, particularly when there is a significant risk of management override of controls. However, some audit teams fail to conduct adequate work in this area, leading to potential oversight of key risks. Implementing rigorous journals testing procedures can help auditors detect and address these risks effectively.
6. Assessing Going Concern and Subsequent Events: Auditors must also evaluate the entity’s ability to continue as a going concern and identify any post-period events that require disclosure or adjustment in the financial statements. Inadequate work in this area can lead to significant misstatements. Auditors should conduct thorough reviews and analyses to support the going concern assumption and ensure all relevant events are accounted for.
7. Ensuring Quality Control: Lastly, maintaining high standards of quality control throughout the audit process is paramount. This includes the active involvement of the ADGM Registered Audit Principal from the planning stage through to completion. Additionally, the engagement partner responsible for issuing and signing the audit report should be consistently involved to ensure continuity and oversight.

Preparing for Your 2024 ADGM Annual Accounts

As the September 30th deadline approaches, it’s vital for companies in ADGM to review their accounting and audit processes and ensure they meet all regulatory requirements. By focusing on the key areas highlighted above, companies can not only comply with ADGM standards but also enhance the accuracy and reliability of their financial statements.

Streamline Your ADGM Annual Accounts Filing with Expert Support from MS

At MS, we specialize in ensuring seamless compliance with the annual filing requirements of the ADGM. Our team of experts guides you through every step of preparing and submitting your annual accounts, aligning with ADGM’s stringent regulatory standards. From accurate financial reporting to timely submissions, we handle the entire process, reducing your administrative burden and ensuring that your business remains in good standing with the regulatory authorities. With our tailored approach, we make sure your financial statements are precise, compliant, and reflective of your company’s financial health.