Many benefits can be obtained from an audit by approved auditing companies in Dubai, with regulated auditors who are capable of handling the matter for your company. Although, besides just the benefits, it is mandated by the government of the United Arab Emirates (UAE) for every company to hire a licensed auditor to undertake an audit. As per Federal Law No.2 of 2015, companies are also obligated to keep a record of their finances (financial records) for five years.
What is Audit in a Nutshell?
An audit is simply the assessment and review of a company’s financial statements. A licensed auditor does this too for companies. An approved auditor needs to know whether the present financial records are true and fair or not. Companies should present their real financial status on their financial records for their own good as not doing so can have repercussions.
An audit is either internal or external, depending on the way a company wants to examine itself. An internal audit is what is usually done by companies if they simply want to assess themselves to see if they are following the laws or their own policies. An external audit on the other hand is mandated by the government of the UAE.
What is the Importance of Auditing?
Many would agree that audit is important, which is indeed a correct theory. There are countless advantages a company can obtain from getting a company audit. This is because a company audit helps identify and unveil mistakes, errors or even frauds.
This leads to the updating of internal controls and the determination of solutions that can be applied to eliminate issues and prevent them from happening in the future.
Aside from the above, audited financial statements from approved auditors are necessary for lenders, investors, lending institutions, banks, etc. to review before they agree on investing in or lending to a company. This decision is based on the financial status of the company and whether or not the company is worth investing in or the company that they lend to can actually pay back what they owe.
What is an Audit Report?
An audit report is a document that contains the findings of an approved auditor as well as the suggested solutions once the audit is completed. This report is given to the higher-ups of a firm.
What Are the Types of Opinions Given in an Audit Report?
An audit report comprises four types of opinions. But there are two opinions that are seemingly more differentiated than the others. They are as follows:
This opinion is often regarded as the clean one as it practically states that a company’s financial records comply with accounting standards. This is what companies generally strive to have. When a company possesses this, it means that its financial statements correctly and fairly represent the company’s financial status.
What it does not do, however, is reveal anything about a business's economic standing. It only states a company’s fair and correct financial statements, following conformity with accepted accounting principles and legal requirements.
Like the unqualified opinion, this too states that a company’s financial statements show a correct and fair representation of their financial status but apart from certain area/s. In such an audit, most matters that need to be dealt with in an audit are, aside from a few. This means that the company follows accounting methods that don’t conform to the standard and accepted accounting principles.
This occurs when there exists a limitation of scope present in the work of auditors in Dubai. It is also a possibility that a disagreement between two parties (auditor and management) arose that caused the auditor to not be able to handle certain matters or areas. It can also be noted that a qualified opinion indicates that the company in question has a deteriorating business due to a lack of transparency in its financial statements.
Farahat & Co. is known to be one of the leading auditing firms in Dubai, catering to businesses all over the country. Our 35 years of experience give us the extensive knowledge that clients need for a successful audit. We give our clients quality solutions that help them prevent and eliminate issues that are present in their company. We are an up-to-date firm that is always in the loop with any changes in the accounting and auditing world to ensure that we are on par with international standards. If you want to know about know more about auditing or avail of our audit services, contact us now!