A Guide to Financial Statement Audit Checklist in UAE
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financial statement audit

Financial Statement Audit Checklist

Every company is liable by the law to audit the financial reports of their UAE company. The purpose of the audit is to provide assurance that the management has presented financial statements that are free from material error. Hiring a certified internal auditor to prove your assurance that your business is financially sound and creditworthy.

There are several types of audits that can be conducted. Some of them are as follows:

  1. Tax audit
  2. Financial audit
  3. Investigative audit
  4. Operational audit

 

What are the types of Statements Audited?

  • Income Statements
  • Balance Sheet
  • The Cash Flow Financial Statement
  • Audit Opinion Letter

#1. Income Statements

The investor or an analyst takes a look at the income statement as it portrays the performance of the business throughout each period. The company’s income statement provides details on the revenues as well as the earnings and expenses of operating activities. Overall, it gives a deeper insight into the holistic operating of the company while the income statement shows the direct, indirect and capital expenses a company undertakes. The role of the auditor is to check the accuracy of the transactions by cross-checking the cash book and individual books of accounts.

#2. Balance Sheet

The balance sheet is referred to as the statement of the financial position of a company. It offers information on what the company is worth from a book-value perspective. The balance sheet is broken into three categories and provides a summation of the company’s assets liabilities and shareholder’s equity on a specific date. The assets section starts with cash and equivalents, which could equal the balance found at the end of the cash flow statement. The auditor examines the existence of assets and liabilities and the accuracy of the figures presented. A comprehensive analysis of the balance sheet can offer quick views. In order for the balance sheet to balance assets must equal liabilities plus equity. In some instances, analysts may also look at the total capital of the firm which analyses liabilities and equity together.

#3. The Cash Flow Financial Statement

This statement gives an overview of how much cash a company has. This also influences its ability to pay suppliers and employees and meet other obligations. The cash flow statement provides a view of a company’s overall liquidity by showing cash transaction activities. It reports all the cash flow and outflows over the course of an accounting period with a summation of total cash available. The auditor may verify the entries made in the cash flow statement against the bank statement and also check the accuracy of the footnotes.

#4. Audit Opinion Letter

The auditor issues an audit opinion letter after completing the audit process and this is included in the auditing financial statements. In this letter, the auditor reveals the financial statements reviewed and the audit method used. If there are no material errors in the financial statements then the auditor will give an audit opinion that the financial statements represent a true and fair
view of the company’s performance and position.

Find out more info: Financial Audit Procedures for Small Organizations

Stages of Conducting Financial Statements Audit in UAE?

The following checklist includes the stages to follow for conducting a financial statements audit in UAE:

Step 1 : Planning and Risk Evaluation

The auditor must have an understanding of the business and the competitive environment in which it operates. The auditor also uses his/her industry knowledge to determine if there are any risks that could affect the validity of the financial statement.

Step 2 : Testing of Internal Controls

The auditor analyses the effectiveness of the company’s internal control procedures. However, the focus is on limits of employee authorizations, protections and preservation of assets and separation of duties. Also, control procedures are tested to determine their strength. If the auditor finds that a company’s internal control is highly effective, as a result, they may decide to scale on more intense auditing procedures. If any ineffective control procedures are detected, auditors will conduct other financial examination to assess the accuracy of financial statements.

Step 3 : Substantive Procedures

Auditors use a broad range of investigative procedures to verify the validity and also the accuracy of the company’s financial data. However, fully audited financial statements are subjected to the most intense scrutiny to verify accuracy and correctness.

Read More: What is the Difference Between a Qualified and Unqualified Audit Report?

Who Prepares Audited Financial Statements?

However, the company management has the responsibility for preparing the company’s financial statement and related disclosures.

Why Audited Financial Statements are Important?

The Audit financial statement should be audited because they provide an outside look at accounting operations and overall fiscal health of a publicly held company.

Financial Statement Auditing Firms in Dubai

Auditing of financial statements establishes credibility with a company’s financial information which also assists shareholders and business owners to make informed business decisions. If you’re looking for experts who can perform a precise audit, seek the help of our seasoned auditors in Dubai, Abu Dhabi, Sharjah and all-around UAE with experts that have been working with multiple clients for all their audit needs.

Our highly qualified auditors offer the most significant level of professionalism in all kinds of audits. However, Farahat and co, our approved audit firm in Dubai will also provide all kinds of financial audit reports to UAE companies. For more information, Contact Us Today!

Jose’s entire educational and professional career has circled around audit and assurance. While in India, he became a CPA and worked as an accountant and an auditor. Afterwards, he relocated to Dubai, where he joined Farahat & Co. as an auditor. He is currently assisting UAE mainland and free zone businesses with their compliance needs. With a reputation for proficiency, quality, and reliability, clients refer to Mr. Jose for independent assessments of organizations structures and operations. Read more