UAE Audit & Assurance Glossary

Audit

Independent examination of financial information to express an opinion on fairness, accuracy, and compliance with applicable reporting frameworks.

Assurance Services

Professional services improving confidence of stakeholders in financial or non-financial information through independent evaluation and reporting.

External Audit

Statutory audit conducted by independent auditors to verify financial statements comply with IFRS and UAE regulatory requirements.

Internal Audit

Independent function evaluating internal controls, risk management, and governance processes to improve organizational effectiveness and compliance.

Audit Opinion

Formal statement issued by auditors indicating whether financial statements present a true and fair view.

Unqualified Opinion

Audit opinion stating financial statements are free from material misstatements and comply fully with applicable accounting standards.

Qualified Opinion

Audit opinion issued when misstatements are material but not pervasive, or audit scope limitations exist.

Adverse Opinion

Opinion issued when financial statements contain material and pervasive misstatements, failing to present a true and fair view.

Audit Evidence

Information obtained by auditors to support conclusions, including documents, confirmations, observations, and analytical procedures.

Inherent Risk

Risk of material misstatement assuming absence of related internal controls within an entity.

Control Risk

Risk that material misstatements will not be prevented or detected timely by internal control systems.

Detection Risk

Risk that audit procedures fail to detect existing material misstatements in financial statements.

Materiality

Threshold above which misstatements could influence economic decisions of users relying on financial statements.

Professional Skepticism

Questioning mindset requiring auditors to critically assess audit evidence and remain alert to misstatements or fraud.

Audit Planning

Process of developing overall audit strategy to ensure effective and efficient audit execution.

Sampling

Audit technique involving examination of representative subset of transactions to draw conclusions about entire population.

Substantive Procedures

Audit procedures designed to detect material misstatements at assertion level through tests of details and analytics.

Analytical Procedures

Evaluation of financial information by analyzing relationships among data to identify unusual fluctuations or trends.

Test of Controls

Audit procedures assessing effectiveness of internal controls in preventing or detecting material misstatements.

Internal Controls

Policies and procedures designed to safeguard assets, ensure accurate records, and promote operational efficiency.

Management Assertions

Claims by management regarding recognition, measurement, presentation, and disclosure of financial statement elements.

Going Concern

Assumption that entity will continue operations for foreseeable future without intention or necessity of liquidation.

Fraud Risk Assessment

Process identifying risks of intentional misstatements arising from fraudulent financial reporting or asset misappropriation.

Compliance Audit

Audit evaluating adherence to applicable laws, regulations, contracts, and internal policies.

Statutory Audit

Legally mandated audit required under UAE Commercial Companies Law and regulatory authorities.

IFRS

International Financial Reporting Standards governing preparation and presentation of financial statements in UAE.

Audit Documentation

Written records evidencing audit procedures performed, evidence obtained, and conclusions reached.

Management Representation Letter

Written confirmation from management acknowledging responsibility for financial statements and disclosures provided to auditors.

Third-Party Confirmation

Audit evidence obtained directly from external parties verifying balances, transactions, or contractual arrangements.

Related Party Transactions

Transactions between entities with common control or influence requiring disclosure and audit scrutiny.

Subsequent Events

Events occurring after reporting period that may require adjustment or disclosure in financial statements.

Opening Balances

Account balances at beginning of period requiring audit verification for first-year engagements.

Comparative Information

Prior period financial information presented for comparison with current period financial statements.

Audit Engagement Letter

Formal agreement defining audit scope, responsibilities, objectives, and terms between auditor and client.

Quality Control Review

Independent review ensuring audit complies with professional standards and firm quality policies.

Audit Committee

Governance body overseeing financial reporting, audit processes, and internal control effectiveness.

Independence

Auditor’s freedom from conflicts of interest ensuring objectivity and unbiased professional judgment.

Ethical Standards

Professional principles governing integrity, objectivity, confidentiality, and professional behavior of auditors.

Reasonable Assurance

High but not absolute level of confidence that financial statements are free from material misstatements.

Limited Assurance

Lower level of assurance where auditors conclude nothing has come to their attention indicating material misstatements.

Review Engagement

Assurance engagement providing limited assurance through inquiries and analytical procedures.

Agreed-Upon Procedures

Engagement where auditor performs specific procedures agreed with client without expressing assurance opinion.

Forensic Audit

Specialized audit investigating fraud, financial misconduct, or disputes for legal or regulatory purposes.

Risk-Based Audit

Audit approach focusing resources on areas with highest risk of material misstatement.

Audit Scope

Extent of audit procedures applied, influenced by assessed risks and regulatory requirements.

Engagement Partner

Senior auditor responsible for overall audit quality, direction, and issuing audit opinion.

Audit Findings

Issues identified during audit relating to misstatements, control weaknesses, or compliance gaps.

Management Letter

Report issued to management highlighting internal control weaknesses and recommendations for improvement.

Material Weakness

Significant deficiency in internal control increasing risk of material misstatement.

Significant Risk

Identified risk requiring special audit consideration due to potential material misstatement.

Professional Judgment

Application of relevant knowledge and experience in making informed audit decisions.

Audit Trail

Documented evidence tracing financial transactions from origin to final reporting.

Compliance Framework

Set of laws, standards, and regulations governing audit and financial reporting obligations.

UAE Commercial Companies Law

Federal law regulating corporate governance, financial reporting, and audit requirements in UAE.

Regulatory Authority

Government body overseeing compliance, licensing, and reporting requirements for entities.

Audit Rotation

Requirement for periodic change of audit firm or partner to maintain independence.

Continuous Auditing

Use of technology to perform audit procedures on real-time or frequent basis.

Audit Analytics

Use of data analysis tools to identify anomalies, trends, and risks during audits.

Engagement Quality Control Review

Independent evaluation of significant judgments and conclusions before audit report issuance.

Professional Standards

International auditing standards governing audit planning, execution, and reporting.

Scope Limitation

Restriction preventing auditors from obtaining sufficient appropriate audit evidence.

Misstatement

Difference between reported financial information and correct amount, arising from error or fraud.

Error

Unintentional misstatement in financial statements due to mistakes or oversight.

Fraud

Intentional act resulting in material misstatement of financial statements.

Audit Methodology

Structured approach adopted by audit firms to conduct audits consistently and effectively.

Engagement Acceptance

Process assessing client integrity, risks, and independence before accepting audit assignment.

Audit Independence Declaration

Formal confirmation of auditor’s independence from client before audit commencement.

Audit Planning Memorandum

Document summarizing audit strategy, risk assessment, and planned procedures.

Materiality Threshold

Quantitative benchmark used to determine significance of misstatements.

Control Deficiency

Weakness in internal control that may not prevent or detect misstatements.

Substantive Analytical Review

Analytical procedures performed as substantive tests to detect material misstatements.

Professional Competence

Auditor’s obligation to maintain knowledge and skills required for high-quality audits.

Audit Sampling Risk

Risk that sample results differ from conclusions if entire population tested.

Audit Evidence Sufficiency

Measure of quantity of audit evidence required to support audit opinion.

Audit Evidence Appropriateness

Measure of quality and relevance of audit evidence obtained.

Compliance Risk

Risk of legal or regulatory penalties due to non-compliance with applicable laws.

Audit Reporting

Process of communicating audit results and opinion to stakeholders.

Audit Firm Licensing

Authorization granted by UAE authorities allowing firms to provide audit services.

Peer Review

Independent evaluation of audit firm’s compliance with professional standards.

Engagement Risk

Risk to audit firm from association with client due to litigation or reputation damage.

Professional Liability

Legal responsibility of auditors for negligence or misconduct.

Client Acceptance Procedures

Processes evaluating ethical risks before establishing professional relationship.

Audit Fees

Processes evaluating ethical risks before establishing professional relationship.

Conflict of Interest

Situation impairing auditor objectivity due to personal or financial relationships.

Audit Universe

Complete set of auditable areas within an organization.

Continuous Monitoring

Ongoing evaluation of internal controls and compliance processes.

Audit Assurance Level

Degree of confidence provided by audit regarding financial information reliability.

Management Responsibility

Obligation of management to prepare financial statements and maintain controls.

Audit Independence Safeguards

Measures implemented to eliminate or reduce threats to auditor independence.

Professional Judgment Framework

Structured process guiding auditors in making consistent judgments.

Audit Engagement Risk Assessment

Evaluation of risks associated with accepting or continuing audit engagement.

Audit Supervision

Oversight ensuring audit team performs work according to plan and standards.

Audit Completion Memorandum

Summary document evaluating audit results and supporting final opinion.

Regulatory Compliance Review

Assessment ensuring entity complies with UAE laws and reporting requirements.

Audit Transparency

Clear communication of audit scope, methodology, and findings.

Audit Governance

Framework ensuring accountability, independence, and quality in audit engagements.

Assurance Engagement

Professional engagement providing confidence over subject matter beyond financial statements.