ICFR compliance in the UAE: A Practical Guide for CFOs and Finance Leaders
Common Challenges and How to Overcome Them
Implementing ICFR: A Step-by-Step Approach
There is no denying that financial transparency is not merely a regulatory obligation, but it is the foundation of trust in the modern business environment.
For CFOs & finance leaders in the UAE, ensuring that financial reporting is accurate, reliable, and compliant is crucial for protecting business value and investor confidence.
Internal Control over Financial Reporting (ICFR) gives the framework to do so. It helps businesses in having credible financial statements that are auditable and accords to the local as well as international standards. In this guide, we’ll explore ICFR compliance in a practical way, look at the audit process, and share actionable steps to strengthen internal controls over financial reporting.
What is ICFR?
Essentially, Internal Control over Financial Reporting (ICFR) is a set of policies, procedures and practices that are meant to ensure that financial statements are precise, complete and in line with accounting standards such as IFRS.
ICFR helps organizations detect and prevent errors or fraud in areas like revenue recognition, expense accounting, and asset management. It includes:
- Preventive controls – to stop errors before they happen
- Detective controls – to catch errors if they occur
- IT controls – in order to protect financial systems.
When an ICFR framework is well implemented, it can significantly reduce the risk of errors in financial statements, help avoid regulatory penalties & protect the company’s reputation
Why ICFR Matters for UAE Businesses?
As we all know, the UAE has emerged as a business hub in the world with investors showing interest in areas such as finance, energy, real-estate, and technology. So, with this growth, obviously there comes a need to ensure that financial controls are strengthened.
Regulators like the Securities and Commodities Authority (SCA), Central Bank of the UAE (CBUAE), and the Abu Dhabi Accountability Authority (ADAA) have prioritized and emphasized ICFR compliance as a way of safeguarding stakeholders & ensuring financial integrity.
Benefits of strong ICFR compliance include:
- Building investor confidence via transparent reporting
- Evading expensive regulatory penalties and fines
- Increasing the efficiency of audits and decreasing costs of auditing.
- Minimizing operational & reputational risks
- Supporting long-term business growth
As a matter of fact, 2025 statistics indicate that more than 68% of UAE listed corporations have enhanced their ICFR, reflecting the increased significance of robust financial controls.
Key Components of Internal Controls Over Financial Reporting
A robust ICFR framework generally covers several key components:
| Control Type | Process | Example | Part of ICFR? |
| Preventive | Revenue Recognition | Revenue posting only allowed when all criteria are met | Yes |
| Detective | Account Reconciliation | Monthly reconciliations reviewed by management | Yes |
| IT General Control | User Access Management | Regular review of system access and segregation of duties | Yes |
| Compliance | Environmental Regulations | Periodic compliance audits | No |
| Safety Control | Workplace Safety | Mandatory safety training for employees | No |
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The ICFR Audit Process
ICFR audit helps evaluate the effectiveness of internal control over the financial reporting and their suitability. Even though it is a compliance obligation, it also helps in enhancing financial transparency and operational efficiency.
Key steps in the ICFR audit process include:
- Planning: Get familiar with the business model, financial reporting risks and regulatory requirements.
- Risk Assessment: Decision on the high-risk accounts, procedures, and transactions.
- Control Testing: Walkthrough, sample testing of test preventive control, detective control and IT control.
- Reporting: Trace material weaknesses and give recommendations that can be easily acted upon.
- Follow-Up: Track remediation efforts and ensure ongoing compliance
Implementing ICFR: A Step-by-Step Approach
An effective strategy to implement ICFR in UAE usually entails:
- Scoping & Risk Assessment: Identify critical processes and assess inherent financial risks
- Documentation: Map processes such as Order-to-Cash, Procure-to-Pay and Financial Close and document major controls and responsibilities.
- Control Design & Implementation: Specify preventive controls and detective controls, provide control ownership and explain control procedures.
- Testing & Evaluation: Test controls on a regular basis to ensure the controls are working as expected.
- Deficiency Remediation: Fill any loopholes with action-oriented plans and schedules.
- Continuous Monitoring: Review and update control as the business and regulatory environment changes.
Following this structured approach helps organizations maintain a dynamic and effective ICFR framework.
Common Challenges and How to Overcome Them?
- Complex IT Systems: Regularly review and test IT controls
- Regulatory Updates: Stay informed about SCA, CBUAE, and ADAA requirements
- Documentation Gaps: Maintain clear policies, procedures, and control matrices
- Resource Constraints: Allocate dedicated personnel for ICFR compliance to prevent bottlenecks
How MBG Corporate Services Can Support Your ICFR Journey?
ICFR journey may feel overwhelming, yet MBG Corporate Services provide hands-on support. We support ICFR audits, control testing, testing gap analysis, documentation, testing and remediation planning. With an in-depth understanding of the UAE regulatory requirements and experience in various sectors, MBG will help in making sure that your ICFR framework is audit ready, compliant, and aligned with industry best practices that provide finance leaders with peace of mind.