Audit Readiness and Internal Controls for Tech Companies in UAE

Our preparation process

Recurring revenue and deferred income

Subscription and software-as-a-service businesses bill ahead and deliver over time. Maintain a contract schedule showing customer, start date, term, billing frequency, price and the portion of the invoice that relates to future periods. The unearned portion is a liability. The schedule should roll forward each month from opening balance, plus billings, less revenue recognised, to closing balance.

Record discounts, free months, upgrades and credits in the schedule. This keeps the figures in agreement with invoices and with what the billing platform reports.

Annual contracts paid upfront deserve special attention, because an error in the start date moves revenue between years.

Capitalised development and R and D costs

Technology companies spend heavily on engineers. Decide in writing which development costs are expensed and which, if any, may be capitalised. Keep timesheets that show who worked on which product or feature. Capitalisation without a documented basis is likely to be challenged by a reviewer.

Contractor fees, cloud hosting, licences and tools should be coded by product where possible. Cloud usage bills are often large and variable, so reconcile the provider's invoice to your usage report each month.

Review the policy yearly and record any project that was stopped, since costs already capitalised on an abandoned product normally need to be reconsidered.

Intellectual property, contracts and access

Evidence of who owns the code matters to investors and acquirers. Keep employment and contractor agreements that assign work product to the company, and keep records of any open-source or third-party licences in use.

For finance systems, restrict who can create vendors, change bank details and approve payments, and keep a log of changes. Customer contracts with service levels may carry credits for downtime, so track any credits owed.

Domain names, app store accounts, cloud tenancies and software licences should be registered in the company's name, not in an individual's. Keep a list of who holds the administrator credentials.

If you promise shares or options to staff, or receive investor funds, keep the signed agreements, the cap table and board approvals together. Trace funding received to bank statements. Record it as equity or a loan according to the terms.

Paperwork worth keeping tidy

• Subscription ledger with start and end dates
• Deferred revenue release schedule
• Development cost analysis and timesheets
• Software and cloud vendor contracts
• Intercompany agreements and recharge schedules
• Corporate tax workings including free zone status

Risks to watch in tech company books

The limits of our service