Even well-managed UAE businesses see audit adjustments at year-end. The same patterns recur across clients: revenue cut-off, inventory provisions, accruals, depreciation. Knowing the patterns lets you pre-empt them.
What you'll learn
→ Revenue cut-off → Inventory provisions → Accruals and provisions → Depreciation and fixed assetsRevenue cut-off
The single most common adjustment. Sales invoiced in late December for goods delivered in January should be next year's revenue. Sales delivered in late December but invoiced in January should be this year's revenue. Auditors test by examining shipping documents around year-end.
Build a year-end cut-off discipline: stop invoicing on the last working day of the year, document the last shipment date for each customer, reconcile billing to delivery for the last 5 working days. The discipline costs an hour and prevents the most common audit adjustment.
Inventory provisions
Stock that has not moved in 90+ days, has reached its sell-by date, or is in technically obsolete condition needs a provision. Auditors run a slow-moving analysis and propose adjustments where the carrying value exceeds net realisable value.
Run your own slow-moving analysis quarterly. Document the basis for any provisions taken or not taken. Photograph damaged stock. Auditors prefer to confirm an existing analysis than to construct one from scratch.
Accruals and provisions
Year-end accruals for known liabilities not yet billed: utility bills, professional fees, audit fees themselves, employee bonuses earned but unpaid. Common omissions inflate profit and understate liabilities.
Auditors test by examining post year-end invoices and asking for a list of expected liabilities. Going through your supplier list and asking 'have we accrued for everything they have done before year-end?' catches most omissions.
Depreciation and fixed assets
Capitalisation vs expense errors: items that should have been capitalised got expensed, or vice versa. Useful life choices that no longer reflect reality, a 5-year-old laptop still on a 3-year depreciation schedule needs writing down.
Run a fixed asset review annually. Check capitalisation against your threshold policy. Review useful lives against industry practice and actual experience. Document the rationale for any change in estimate.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.