UAE needs autonomous Accounting Body
19 May 2011
In the context of the impressive growth of the UAE businesses which have seen 500-800% growth in company incorporations across the free zone of the UAE alone in the last decade a leading business consultant said that the country needs an autonomous accounting body to harness and consolidate best practices in book keeping for the benefit of the growing economy.
Mr Jitendra Gianchandani Managing Partner of Jitendra Chartered Accountants (JCA) said the growth in company registrations in the UAE has grown phenomenally in the last 10 years and an independent accounting body would complement this growth and support the forward march of the economy.
It would also nurture and accelerate the adoption of globally benchmarked corporate governance standards across the UAE as well as accelerate capital market culture in the economy.
Jitendra Chartered Accountants celebrating its 10th anniversary this year said such an independent regulatory and standards body would add value to the maturity of the UAE economy which crossed a projected nominal GDP of Dhs1 trillion in 2010 compared to Dhs250bn in 2001.
Paradigm change
The economic landscape of the UAE has experienced a paradigm change in the past 10 years. In 2001 there were approximately 5,000 companies in four free zones. The 2011 count shows that there are 40 free zones across the UAE now with some 40,000 registered companies which is ample testimony to the economic growth of this country.
JCA statistics show that as of 2011 there are over 7,000 companies in Jebel Ali Free Zone (JAFZ) over 3,000 in Dubai Airport Free Zone and more than 3,000 in the Tecom cluster comprising Dubai Media City and Dubai Internet City. The number of companies in Dubai International Financial Centre (DIFC) is now at nearly 800 while over 3,000 companies are registered in RAK Free Zone and Ajman Free Zone respectively and 10,000 in Sharjah across SAIF Zone and Hamriyah.
The number of national and multinational companies in the UAE have doubled in the past 10 years Mr Gianchandani said adding that the growth in the number of free zone companies alone was testimony to the growth of the UAE, and Dubai in particular, in the last decade.
The growth has evidently opened opportunities for accounting auditing professionals in the UAE as well as reinforced the need to streamline accounting and auditing practices with transparency in focus.
Need for accounting entity
At present IFRS and GAAP are widely used by most of the local and international companies but there is no accounting body in the UAE. He holds strong views that the UAE should have their own autonomous accounting body as it will create a strong capital market culture in the country and will create a healthy corporate governance culture among businesses.
Once the accounting body is created it will monitor and focus on the different aspects of the accounting and auditing professions and will bring uniformity in presentation of accounts. Foreign firms will also easily incorporate the accounts with head office if uniformity is maintained.
Reflecting the growth of JCA in the last 10 years within the context of economic growth and prosperity of the UAE Mr Gianchandani said that when he set up business in 2001 the population of the UAE was around 2.5 million whereas today it is over 7.5 million.
In tandem with the growth of the economy the accounting and auditing industry also grew in leaps and bounds following mandatory stipulations by government bodies to enforce transparency and foster a healthy corporate culture in the UAE.
The UAE economy has always adapted to the fluctuations of the global economic cycle remarkably well. The Government and people are open to new ideas. They are accepting and adopting new things quickly and even after the recession the UAE is doing reasonably well as they have responded quickly to the situation.
The past 10 years was a growth story for JCA which started as a 200sq ft office in 2001. The firm now has offices across the UAE and India handling some 1,000 clients across various industries.
What started as an accounting and auditing firm is today a diversified business consultancy entity offering an array of services from company formation, trade mark registration, corporate finance and HR consultancy to management consultancy.
The company also helps businesses in corporate restructuring and liquidation and advises many clients how to put in place systems that improve productivity and cost-efficiency.
Post-recession and the need for corporate restructuring which also includes spin offs and liquidation of business units have increased in the UAE and we help companies make sure that internal controls in such cases are in line with the legal infrastructure of the country so that these processes can be seamless and less time consuming.
The UAE economy needs to reinforce norms of transparency more rigorously across its legal systems so as to protect investors.
Source: Ame Info
