What is an Audit?
An audit is a process of examining or verifying the annual financial report presented by a company or organization by an external auditor to make the accounts are done in accordance with the standards of the accounting, the tax is paid without any alterations and there are no irregularities. The financial report consists of 3 statements:
- Balance sheet
- Cash flow statement
- Income statement
The financial reports are audited by the Auditing Companies in Dubai by following the standards set by the UAE Government body. Once the auditing is finished, auditors will write a report on their work called audit report which will contain their suggestions and what the companies have to do if there are any irregularities. In UAE, generally, all the companies and organizations are subject to an audit annually. Other organisations may require or request an audit according to their structure and ownership.
What is the purpose of Audit?
In UAE also like other countries, the audit is conducted by an independent third party to examine and verify the financial statements of an organization. The objective of an audit is to find whether the financial statements are presented accurately and whether they are prepared in compliance with the auditing laws and rules of the UAE Government. This audit report is very important to the company, it can enhance the credibility of the company among the investors as well as the clients/ customers. Also, it helps to improve the companies internal structure and control thereby by improving the companies performance.
The businesses should hold the financial record of all its financial activities. Audit helps to give transparency, in the business operations. It helps to build trust and belief among the investors and clients. Auditing is a part of taxation as well. Tax Consultants Dubai, do auditing in order to verify the tax is paid on time and if exact tax payment is done by the company according to the rules of UAE Government.
How to Conduct an Audit in UAE?
An audit is conducted through various steps/ procedures, where you need the complete cooperation of the company and its staff. We will see how an audit is performed by Audit Firms in Dubai.
- The financial report will be prepared by the company’s management. The financial report should be prepared following the legal standards and criteria.
- The company’s/ organization’s managing director should approve the financial report before giving to the external auditors.
- The auditors will initially analyse the company’s status and activities and the various issues face by the company during the reporting period which have affected the company.
- For each major activity listed within the financial report, auditors identify and assess any risks which could have a big impact on the financial position or financial performance, and also the measures that the organisation has taken to mitigate those risks.
- Based on the risks and the measures taken to control the situation the auditors will see the what the management has done to make sure the financial report is accurate, and examine supporting evidences provided by the company.
- After examining the cash flow, financial position of the company etc. Auditors will write a report on the audit performed describing whether the financial statements provided by the company is in compliance with financial reporting standards of the UAE Government.
- The prepared report is provided to the shareholders, to the management of the company etc.