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Checklist For Financial Audit of Construction Companies In UAE

Audit of Construction companies in Dubai and UAE audits go beyond checking that guidelines and specifications are being adhered to. This includes pre-construction and planning reviews. The audit covers the entire construction process, with a strong emphasis on reducing costs.

The checklist for internal audit of construction companies in UAE, includes planning for risk management. This includes monitoring invoices and ensuring industry best practices are being observed. This includes financial control. certified internal audit in Dubai experts responsible to keep a project on track and manage risk. High costs can result from increasing risks. To meet the needs of clients or investors, it's important to hire an auditor as your business grows.

Auditing and Project Launches

UAE companies should hire reliable internal audit service UAE team to supervise major construction projects in the planning phase. This will allow for greater third-party input and oversight of large investments or new types. Auditors can establish policies to control additional spending, invoicing, compliance, and other matters by starting at the beginning. This allows potential problems in construction plans to been identified and corrected before they are finished. If not carefully considered, a glass wall can be too costly.

Construction Internal Audit Process

The scope of services rendered and the time period that the firm was hired will determine the scope of an audit. Internal audit companies in Dubai will monitor billing and construction costs to make sure the project stays on budget and within schedule. An auditor may also inspect the site for potential ways to improve efficiency or pivot the building process in order to address environmental factors like weather delays or delays due to municipal building codes. Your contractor will usually direct the construction site and make any necessary changes. An auditor can verify that engineers are making good decisions and that contractors are not directing their efforts in a way that could result in higher prices.

Audits Offer A High Return-On-Investment

A Dubai auditor can help to ensure that a building project is completed on time. Delays can result in higher costs if a contract term has been extended. It is crucial to manage time. An audit of a construction project will yield a high return on investment because it focuses on keeping costs low while completing the project on schedule. An experienced firm can provide a construction audit guide.

Additional auditing services may be included in the quoted price. For the build, many firms combine auditing and cost segregation studies. These studies can be used to help you reclassify assets in order to improve depreciation speed, tax savings, and increase your overall profit.

Read also: Checklist for Auditing Non-Profit Organizations

Structural Reviews on Projects

Audit of construction not only look at the financial aspects of a project, but also safety and construction elements. This audit may also include an inspection of finished areas and materials to ensure all contract elements are being followed. Inspection of materials could reveal that beams were made from cheaper wood or that the ramp used to deliver the goods was not designed with the correct slope for loading and unloading the merchandise. Before the municipality code enforcement officer conducts final inspections, independent inspectors inspect more technical aspects of construction.

What are some issues construction companies could anticipate?

Auditors from different states might be more focused on certain issues than others. Here are some common issues that may be raised during an audit.

Property that has been installed vs. property that has not been installed

If property is delivered to the job but not installed by the contractor it may be considered a sale of tangible personal properties. The transaction is not considered an increase to realty. This is because the "machinery" or equipment that is being installed is not an accessory to the structure and is not intended to serve any function:

  • Matching actual operations to key documents
  • contracts
  • Billing documents
  • Change orders

Important to remember that the contract is the primary document used for tax determination. If a contract is not verbal, billing documents and change orders should be treated as primary documents. These key documents should be matched by accounting to indicate that the sales tax may not have been properly calculated and paid.

Are The Contractors Tax-Paid Or Not?

Auditors are looking to confirm that contractors are only responsible for tax on purchase costs and that all purchases have been properly tax paid. The contractor's responsibility must be accurately documented in the company's cost of operation records.

Only costs

Costs of installed materials and selling prices for over-the-counter purchases

The cost of materials and the billed price for fixtures

If they don't match, it is a red flag for the auditor.

Resale Certificates

Auditors need to determine whether the applicable sales tax is the buyer's liability or the sellers. Auditors in Dubai and UAE must request a copy the resale certificates for every purchase from the seller where the contractor is the buyer. The auditor can contact the seller to request copies of certificates if the contractor's records are not complete or in order.

Costs Include Expenses and Supplies

The auditor should be able to see if the contractor isn't correctly charging tax-paid supplies and expense items to expense account, instead of being included in material purchase.

Fixed Assets and Expense Items

It is important to be aware of the accounting method used for transactions that involve the withdrawal of material from stock for personal use. This is another red flag.

How Internal Audit Firms in UAE Can Help You

If you are involved in construction in business, audit of construction is perhaps one of the most crucial functions to streamline in your business, and we can help you make it just that way. Lets have a talk and discuss how our certified internal audit firm in Dubai can help you.

Read also: Business Audit in UAE : How it can secretly save your company

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.