In terms of business challenges, reforms to the legal framework, improved corporate governance requirements and risk management in business would enhance the development and resilience of the economy. These reforms are essential, since the global economic crisis has placed a greater importance on the need for strong internal auditing and risk management procedures. Indeed, good corporate governance is a key factor in sustaining economic growth and development.

As economic conditions change, so must risk management priorities. Thus, internal auditors should consider whether they are aligned with the strategy and direction of the company. By focusing on the company’s long-term strategy, understanding the impact of short-term initiatives and aligning itself accordingly, the internal audit function can better position itself to monitor and address risk management activities. Risk management is also an increasingly important business driver. An enterprise-wide approach to risk management enables an organisation to consider the potential impact of all types of risks on all processes, activities, stakeholders, products and services.

For all organisations, there is a need to understand the risks being taken when seeking to achieve objectives and attain the desired level of reward. It is vital for organisations to recognise and prioritise significant risks and identify the weakest critical controls.

Reform of insolvency and creditor/debtor regimes can improve economic efficiencies and strengthen market resilience in times of crisis. A clear, predictable and transparent means for a company to reorganise would benefit the national economy by reducing the costs of capital for UAE companies over the medium to long term. A bankruptcy law already exists but it has not been tested by any company, leaving much uncertainty in legal circles about how it could be applied in reality. Best practice corporate governance provisions can stimulate investment by enhancing confidence.

The UAE accounting standards requirements for auditing practices are not yet clearly developed. Presently, the Commercial Companies Laws do not specify any accounting standards framework for the preparation of the financial statements. The Central Bank of the UAE has made it mandatory for banks to prepare their accounts as per International Financial Reporting Standards (IFRS). Listed companies prepare their accounts as per IFRS. In the absence of any specific standards framework in the UAE, most of the practising firms apply IFRS in the preparation of audited financial statements, and apply international standards of auditing in the conduct of audit of financial statements. The Real Estate Regulatory Agency (RERA), the regulatory arm of the Land Department, also recommends that the financial statements of building owners’ associations should be prepared as per IFRS.

Dubai’s Jointly Owned Property Law (Law No. 27 of 2007) establishes a framework for the development and subdivision of developments into such units and common parts, with the subdivision referred to as “jointly owned property”. Each development in Dubai comprises not only a number of units, but also parts designed for common use by unit owners and occupants.

Regulations have been introduced to enforce the law and they provide that an owners’ association (OA) of all the unit owners is responsible for the management, operation and maintenance of the common areas. For each development, a “jointly owned property declaration” must be filed with the Land Department. RERA has also made it mandatory to submit the annual audited financial statements of OAs.

Under the Strata Law, OAs must appoint an auditor at the first annual general meeting. At the end of the financial year, the auditor will evaluate annual financial statements and as a means of giving guidance to the board during the initial transition phase. The Strata Law accounts for this and provides OAs with the power to hold a lien on the property of those individuals who have not paid their respective charges. The Strata Law ideally gives homeowners greater control over managing their property.