WHERE is this available?
In all Emirates in UAE - except specific authorities and entities who insist on audit reports from auditors listed with them
In all free zones in UAE - except Hamriyah Free Zone, SAIF Zone and such free zones where we are yet to be listed
What is this CONCEPT of No Frills Service?
Tiny and small businesses operate on a skeletal infrastructure. They have the minimum office space, minimum staff, minimum support from third parties - it’s like they operate as one-man-armies like the characters we see in movies like Commando and Rambo. We have our deepest admiration to the way they function and decided to extend our hand to them they way they would like it. There are exceptions, but we have considered the vast majority of them who operate this way.
We have designed this service in the manner of a “no-frills airline ticket” where only the basic, essential and statutory service is provided and all other benefits are charged extra.
WHO are TINY and SMALL clients?
Primary test
|
Parameter |
Test for Tiny |
Test for Small |
| •
| Constitution | Single shareholder | Two Shareholders or Branch or Wholly Owned Subsidiary |
| •
| Number of people | Alone with at the most one assistant like secretary or sales manager or driver | Three to seven people handling similar functions or support function |
| •
| Office space | Usually a flexi-desk or at the most a small office | Small office or a larger space to suit the style of the business but not occupied |
| •
| Activity | Professional service, trading of single class of products, commission agent, etc | Professional service; trading in few products; small business like a saloon or laundry, language training centre, tailoring shop, ready-made garments store; etc |
| •
| Fixed assets | At the most a table or two, few chairs, a computer with peripheral devices and at the most a car | Office furniture, office equipment, administrative vehicles or in exceptional cases a small machinery set |
| •
| Inventory | None or in transit | In transit or with a third party and sold before audit |
| •
| Receivables | Few | Few |
| •
| Bank accounts | One, maybe multi-currency | One or two, not many |
| •
| Borrowings from bank | None | Trade finance, if at all |
Secondary test
- Constitution often, though not always, determines the purpose of forming a business. Tiny businesses are usually proprietorships that are formed to render services that are the expertise of its owner. Small outfits are created by larger organisations for representing themselves in the local market (for example, the branch of an aircraft manufacturer) but negligible commercial activity is carried out from there.
- Number of people may sometimes be more, for example a law firm that has half a dozen lawyers supported by another half dozen support staff like office boys and drivers. Yet, if the nature of service is limited to three types of services, the firm may still be counted as a small firm.
- Office space is usually directly proportional to the number of people working in an organisation. However, some businesses require a larger space (for example architects, auditors and lawyers may require separate meeting places for clients) and some prefer large spaces to show a degree of affluence that attracts a different kind of clientele. So, although the size of office is an important consideration, it may well be excused in some circumstances.
- Activity or simplicity of the business model is an important consideration for the scale of business and the nature of complexity of its transactions. Tiny businesses promote the single owner like an accountant, architect, artist - painter / sculptor / singer / music composer, sportsman - boxer / footballer - for fees and endorsements, trainers - sports / life skills / artistry / languages / technical subjects, commission agents, traders of individual products - sugar / cement / aircraft parts / wheat / commodities, and such other businesses who have less than a dozen sale transactions each month. Small businesses accommodate activities requiring a little more number of people like a large team of accountants / architects, a group of people like a laundry / saloon / tailors / trainers, who either collectively render a similar service / trade in the same set of products or render common services / trade in similar products under a common banner.
- Fixed assets are required for complex commercial and industrial activities. A tiny business with one or two people may at the most have an office setup and their own means of conveyance where most of these assets are owned in the personal name of the users. Small businesses would have computers - laptops / printers / modems / network drives, furniture and equipment - tables / chairs / desks / air-conditioners / pantry equipment, administrative vehicles or a rare delivery vehicle and in exceptional cases a single machine like a washing machine for laundry / printer for a designer / sewing machines for tailors / delivery van for sugar. In case where there are number of assets, an additional fee will be applied for physically inspecting the same, although the business may still be considered small for the purpose of estimation of work and fee.
- Inventory is never held by tiny businesses - even if they are trading in a physical commodity, the goods will be in transit and sold before the first fortnight of the next year. Small businesses do not own a warehouse but may sometimes hold some inventory in a third party’s warehouse. This is also usually disposed off before the completion of the audit. As an exception, some businesses like sugar or fuel traders may be treated as small although they hold inventory that is clearly measurable and whose value can be determined without ambiguity. Where applicable, an additional fee would be charged for stock taking exercises.
- Tiny and small businesses have few customers - usually less than 10 for traders or several but not clearly identifiable for businesses like saloons / laundry as a result of which they wouldn’t have receivables. Receivables are usually realised before the completion of the audit report. The recovery from receivables is easily identifiable with sales bills, most amounts are received during the audit period (the time after the end of the reporting year and before the issue of the audited financial statements) and balance is recovered almost entirely before the date of the audit report.
- Bank accounts are one or two, to receive amounts from the few customers or process payments to suppliers and carry out expenses. Often, credit card of the shareholder is used as a source for petty cash expenses. Tiny and small businesses do not have accounts in more than two banks, except in rare instances.
- As tiny and small businesses have no fixed assets, they do not avail term loans from banks. At the most, they avail trade finance, which is often transactional, means it rolls over with each set of transactions and so is easy to monitor. However, as a matter of our principle for charging fees, the moment bank finance appears, we stop considering the business as small (tiny is definitely ruled out) as complicated calculations and reporting implications increase greatly with the introduction of borrowing facilities in a business.
- There could be other secondary tests that are applied to determine whether a business is small or tiny. For example, the expenses are clearly identifiable with volume of sale or the number of employees and the verification of these expenses is possible by expense head.
Exceptions
- Large number of tiny transactions like a grocery store
- Contractors
- Manufacturers
- Holding companies or head offices of multiple branches or some kinds of SPVs (special purpose investment vehicles) where the reporting requirements are elaborate and require our special expertise
- Other businesses at the discretion of the auditor
What is the BENEFIT to TINY and SMALL Businesses?
- On the condition that you satisfy the conditions mentioned below, tiny and small businesses may avail a 50% discount on the fee for annual audit, as determined by the fee calculator.
- On satisfying the additional conditions, you may avail up to a 66% discount on the fee for annual audit, as determined by the fee calculator.
- Note that the discount may be withdrawn in certain cases.
WHAT CONDITIONS are required to be satisfied for availing this discount?
Conditions for availing 50% discount:
- The client should have approached us directly - not with any referral, not through an intermediary service provider, not with the reference of any regulator, etc.
- The client should not require a physical meeting with the auditor - all information should be transmitted on phone, by email, on information sharing applications like WhatsApp, courier, by post, by visiting our office, or such means that do not require the auditor to spend time in commuting.
- All information should be made readily available without unreasonable follow-up.
- There should be no subsequent modifications to information that is once provided - because this requires reworking. In the event of reworking, it will be treated as scope creep.
- Sometimes, we feel we should extend a discount to some categories of businesses like women entrepreneurs, sportsmen, ex-services personnel, wildlife or nature conservationists, social activists and those who have, in general, served the planet and its inhabitants in an exceptional manner. However, we have not yet come up with a firm strategy on this and would consider these on a case-to-case basis depending on their contributions to society.
Conditions for availing 66% discount:
It’s all about the volume of work that the auditor is expected to perform while carrying out his duties as an independent evaluator of the financial statements.
So, if the client has an exceptionally low activity, typically it is:
- A flexi-desk or a single person with no employees
- who generally doesn’t reside in the country and incurs no local expenses
- has a single line of activity with only one service rendered or product traded and that too not frequently (not more than 10 invoices during the year) and of a low value (not more than AED 1 million) (although, this can have an exception in cases like minerals trading where 5 invoices would have a value of AED 10 million, in which case this discount does not apply)
- does not require copies of the audit report besides the original
- and generally follows all the requirements of the economy package mentioned above
Conditions for availing 80% discount:
This service is almost free - we take a slight ‘commitment fee’ of up to 20% just as a formality.
We hope our clients do not come into a situation where they need someone’s support to this extent, however, the following may seek our benevolent gesture:
- Loss making businesses who need to issue an audit report to an educational institution or a charitable institution to justify their low income
- People of determination (it is likely that this will be treated as a premium service and a discount will be applied on that)
- Legal heirs of businesses whose directors have taken the drastic step as a recourse to mounting financial debts
- Any such or similar cases where our small contribution can alleviate someone’s sorrows or support a cause
Conditions when discount may be withdrawn:
- Shareholders who give provide piecemeal information or keep changing the information frequently or engage in excessive conversations.
- We believe that the discount needs to be withdrawn for any reason whatsoever, without disclosing the reason to anyone - we understand this is a blanket right, but we have not exercised this right even once during the existence of this offer, yet we retain the right to exercise it at our will.
Other conditions:
- We may disclose additional conditions to availing the discount by direct communication although it may not be specifically mentioned on our website.
