What are compliance services in the UAE?
A Compliance Audit verifies a business’s ability to meet regulatory requirements and contractual obligations according to the law. Specific standards and regulations are defined for certain business setups or particular functions/processes within an organization. These requirements are either enforced by law or agreed upon between the parties involved in a contract. Adhering to these requirements is mandatory for conducting business or specific functions/tasks. Compliance reviews ensure that a company follows the established standards or requirements. An organization can have compliance services in the UAE to review adherence to regulatory requirements across various departments such as finance, IT, manufacturing, HR, and others. The scope may also depend on the type of financial firms, marketing, and sales.
Purpose of compliance services in the UAE
The primary purpose of a Compliance review is to assess the overall effectiveness of a business’s compliance practices and protocols. A Compliance auditor examines processes and transactions to determine if they adhere to established standards. This ensures compliance with regulatory requirements and whether terms and conditions are followed during daily operations.
The Flow of Compliance Engagement according to SAE 3100
- Understand the business environment
- Identify the requirements and applicable criteria
- Understand the internal compliance function
- Assess the risks of non-compliance
- Develop strategies and audit approaches to address risks
- Perform the audit as defined
- Evaluate the evidence
- Reporting
Methodology for compliance services in the UAE
The compliance services review may be conducted internally but is usually initiated by the certifying organization. If a compliance review is not a mandatory requirement by law, management may initiate it to ensure effective compliance at any given time. The ideal methodology includes:
- Initial Meeting: The first step involves a meeting between the auditor and management.
- Employee Review: Assess employees’ performance and determine the level of individual compliance.
- Department Review: Review operational, financial, and other paperwork from business departments.
- Draft Report: Auditors draft a report on non-compliance with mandatory regulatory requirements, non-adherence to stated terms and conditions of law/rule/act, or contract. This report includes numerical errors, listing issues, authorized payments not made, errors, and other audit concerns. Non-compliance with regulatory requirements and deviations from agreed contracts are also included.
- Final Report: Auditors hold a final meeting with the company management after completing the compliance review.
What are the risks of non-compliance?
Often, management fails to measure the business’s risk appetite, which is the capacity for taking risks. Non-compliance with defined standards, regulations, or non-adherence to terms and conditions can be risky for the business. Non-compliance may result in penalties, fines, or even liquidation of the company, or the revocation or termination of licenses or registrations. A compliance review differs from an external audit in that it does not form an opinion on the financial report but rather on the client’s compliance with specified clauses according to provisions of the law or contract.
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