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Industry-Specialized Auditors

Trading Company Audit Services in Dubai

Inventory Verification | Multi-Currency | Import/Export Compliance

Specialized audit services for trading, import, export, wholesale, and distribution businesses. Our auditors understand inventory challenges, transfer pricing, multi-currency transactions, and VAT compliance unique to UAE trading sector.

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Ministry Approved
Industry Specialists
Fast Turnaround

Trading Sector in the UAE

The UAE is one of the world's leading trading hubs, with Dubai alone handling over $380 billion in non-oil foreign trade annually. Trading companies form the backbone of this economy, ranging from small import-export businesses to large multinational distribution networks. Every trading company registered in UAE, whether mainland or free zone, requires annual statutory audits under Federal Commercial Companies Law.

Trading company audits present unique challenges: high transaction volumes, complex inventory management across multiple warehouses, multi-currency operations, transfer pricing between related entities, and integration between customs declarations and financial records. Our specialized trading audit team has audited over 300 trading entities across sectors including electronics, textiles, food & beverage, building materials, automotive parts, and industrial equipment. As [leading commercial audit firms in Dubai](/en/top-10-audit-firms-dubai), we bring deep expertise to trading sector audits.

With UAE's implementation of Corporate Tax in 2023 and enhanced transfer pricing requirements, trading companies face increased compliance complexity. Auditors must verify that inter-company transactions are at arm's length, inventory valuations are supportable, and customs duties are correctly accounted. Our team includes former customs consultants and transfer pricing specialists who understand these complexities.

Unique Challenges in Trading Audits

Industry-specific audit complexities that require specialized expertise and proven methodologies

Inventory Verification
Trading companies often hold inventory in multiple locations: bonded warehouses, free zone facilities, third-party logistics centers, and transit. Physical verification, cut-off testing, and reconciliation between perpetual records and actual stock are critical audit procedures.
Multi-Currency Transactions
Trading businesses deal in multiple currencies (USD, EUR, AED, CNY, etc.) with foreign exchange gains and losses. Auditors must verify exchange rates used, revaluation of foreign currency balances, and hedging arrangements if applicable.
Cost of Goods Sold Accuracy
COGS is the largest expense for trading companies. Auditors must test purchase invoice validity, freight and insurance allocation, customs duty capitalization, and inventory costing method (FIFO, weighted average) consistency.
Transfer Pricing
Group trading companies buying from or selling to related entities must maintain transfer pricing documentation proving arm's length pricing. Auditors assess compliance with UAE Corporate Tax Law transfer pricing requirements.
Customs & VAT Reconciliation
Import values declared to customs must reconcile with purchase accounting. VAT on imports must match customs documentation. Discrepancies can indicate control weaknesses or compliance issues requiring investigation.
Revenue Recognition
Trading companies must determine when control transfers to customer: at shipment, delivery, or payment. Incoterms (FOB, CIF, DDP) affect revenue timing. Consignment arrangements require special accounting treatment.

Trading Company Regulatory Compliance

Comprehensive compliance coverage across all applicable regulations and standards

UAE Corporate Tax Law
Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses
  • 9% corporate tax on taxable income exceeding AED 375,000
  • Transfer pricing documentation for related party transactions
  • Country-by-country reporting for large multinationals
  • Thin capitalization rules for debt financing
  • Economic substance requirements for certain activities
VAT Regulations
Federal Decree-Law No. 8 of 2017 on Value Added Tax
  • 5% VAT on taxable supplies (domestic sales)
  • Zero-rated supplies for exports and designated zero-rated goods
  • Input VAT recovery on business expenses
  • Quarterly VAT return filing (or monthly for large businesses)
  • Tax invoice requirements and record keeping (5 years)
Customs Regulations
Federal Law No. 3 of 2021 on Customs Law
  • Accurate customs declaration of import values
  • Proper HS code classification for tariff determination
  • Import duty payment (varies by product category)
  • Customs documentation retention (5 years)
  • Free zone vs mainland customs procedures compliance
Anti-Money Laundering
Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering
  • Customer due diligence for high-value transactions
  • Beneficial ownership disclosure and verification
  • Suspicious transaction reporting to FIU
  • Record keeping of customer identification
  • Risk-based AML compliance program

Our Trading Company Audit Methodology

We have developed specialized audit procedures for trading businesses that address inventory complexity, multi-currency operations, and high transaction volumes efficiently.

1

Planning & Systems Understanding

We analyze your trading operations, inventory flow, ERP systems, and key controls to design an efficient and effective audit approach.

Key Deliverables:

  • Business and industry risk assessment
  • Inventory locations and procedures mapping
  • Accounting system and controls evaluation
  • Transfer pricing risk analysis
  • VAT and customs compliance review
  • Sample size determination for transaction testing
2

Fieldwork & Substantive Testing

Our team performs targeted testing of high-risk areas including inventory counts, purchase verification, revenue recognition, and regulatory compliance.

Key Deliverables:

  • Physical inventory observation at year-end
  • Purchases and COGS testing (sample-based)
  • Revenue cut-off and recognition testing
  • Foreign currency gains/losses verification
  • Related party transaction review
  • Customs and VAT reconciliation
3

Reporting & Advisory

We provide statutory audit reports plus management insights on inventory optimization, cost controls, and compliance improvements.

Key Deliverables:

  • Audited financial statements (Arabic & English)
  • Independent auditor's report per ISA standards
  • Management letter with operational recommendations
  • Inventory management improvement suggestions
  • Transfer pricing compliance guidance
  • VAT and customs optimization opportunities

Why Choose Our Trading Audit Services

Industry Specialization

Our audit team includes specialists who have audited trading companies across all major sectors: electronics, FMCG, building materials, automotive, textiles, and commodities. We understand your industry's specific challenges.

Inventory Expertise

We have developed proprietary inventory audit procedures that efficiently verify stock across multiple locations, including surprise counts, drone-assisted warehouse verification, and statistical sampling methods approved by UAE regulators.

Transfer Pricing Capability

Our team includes transfer pricing specialists who can review your inter-company pricing policies, benchmark analyses, and documentation to ensure compliance with UAE Corporate Tax transfer pricing requirements.

Technology-Enabled Auditing

We use data analytics tools to analyze 100% of your transactions for anomalies, duplicate payments, pricing inconsistencies, and VAT compliance issues, rather than relying solely on sampling.

Fast Turnaround

Our experienced trading audit teams can complete most audits within 2-4 weeks from fieldwork start, minimizing disruption to your operations and ensuring timely statutory filings.

Value-Added Advisory

Beyond compliance, we provide practical recommendations on inventory optimization, working capital improvement, VAT recovery maximization, and customs duty savings opportunities based on audit findings.

Common Audit Findings in Trading Companies

Learn from common issues we identify and how to resolve them proactively

Issue

Inventory Valuation Errors

Impact

Inventory overstated due to obsolete stock not written off, or incorrect costing method application

Solution

Implement regular slow-moving inventory review, apply consistent FIFO or weighted average method, document write-off policy

Issue

Cut-off Discrepancies

Impact

Goods in transit or received after year-end incorrectly recorded, misstating inventory and payables

Solution

Establish clear cut-off procedures, reconcile shipping documents to accounting records, record goods in transit separately

Issue

Related Party Pricing Issues

Impact

Inter-company sales or purchases not at market rates, creating transfer pricing risk and potential tax adjustments

Solution

Prepare transfer pricing documentation, use comparable uncontrolled price method, maintain arm's length support

Issue

VAT Recovery Not Maximized

Impact

Input VAT on legitimate business expenses not claimed, or expenses incorrectly classified as blocked input tax

Solution

Review all expense categories for VAT recovery eligibility, ensure proper tax invoices obtained, claim all eligible input VAT

Issue

Customs Value Discrepancies

Impact

Declared import values to customs do not match purchase invoices, risking customs penalties and VAT issues

Solution

Reconcile customs declarations to purchase records monthly, investigate variances, correct freight allocation if needed

Issue

Foreign Exchange Controls Inadequate

Impact

Foreign currency receivables and payables not revalued at year-end, misstating assets/liabilities and P&L

Solution

Implement month-end FX revaluation process, use official exchange rates, properly classify FX gains/losses

Success Story

Case Study: Multi-Location Electronics Distributor

The Challenge

A major electronics distributor with 7 warehouses across UAE, 4,000+ SKUs, and $200M annual turnover struggled with inventory discrepancies between physical counts and system records. Previous audits required extensive adjustments and delayed financial reporting.

Our Solution

We implemented cycle counting procedures throughout the year, integrated perpetual inventory system with barcode scanning, established variance investigation thresholds, and trained warehouse staff on proper receiving and issuing procedures. We also conducted surprise inventory counts at 3 locations mid-year.

Measurable Results

Year-end inventory variance reduced from 8% to under 1%
Audit fieldwork time reduced by 40% due to improved records
Identified $1.2M in obsolete inventory written off
Discovered $300K in goods received not invoiced by suppliers
Clean audit opinion issued 2 weeks earlier than prior year

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Frequently Asked Questions

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