A financial audit is a crucial time for any organization. Audits can be both internal and external. The basic reason behind an audit is to make sure that all employees are following the rules, regulations, and policies set by an organization.
The audit also ensures that the assets owned by the organization have been obtained through ethical and legal ways, and are being used efficiently.
According to one Harvard Business Review article, there are four types of small businesses, and each one matters. There are non-employee businesses that are sole proprietorships, main street businesses which are locally based, suppliers that are part of B2B trade, and high growth businesses that are innovation-driven.
Large organizations have more extensive audits but small organizations are also responsible for following financial laws and regulations. This article discusses a few simple financial audit procedures carried out for small organizations.
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Five steps to an effective financial audit in UAE
- Documents and Records Verification
- Calculation Procedure
- Meeting Reviews
- Tangible Assets
- Scanning the Accounting Records
Step 1: Documents and Records Verification
This is the analysis of all financial records and documents kept by the organization. They can include financial statements, invoices, and receipts. In large organizations, there is a huge amount of documents so the auditors from top auditing firms in Dubai usually use random sampling for the analysis. On the other hand, small organizations don’t have extensive records so it is much easier for auditors to go through all of them. Auditors check the correctness and accuracy of data in these documents.
Step 2: Calculation Procedure
This is a common and reliable procedure used by auditors in Dubai, UAE. It also involves the recalculation of the figures mentioned in the financial documents of the organization. It ensures that there is no false figure and that the end results are accurate.
Step 3: Meeting Reviews
Auditors from the best auditing firms in Abu Dhabi, Dubai, Sharjah, Dafza, and Jafza review the minutes of management meetings to identify any issues discussed that might affect financial performance. Auditors also make sure that solutions for different problems deduced during these meetings are being implemented.
Step 4: Tangible Assets
Organizations keep an inventory list that records all the tangible assets in use. An auditor’s work involves comparing this list with the physical assets to make sure that the assets actually exist in the organization. These lists also mention the age and condition of the assets and auditors figure out of the data about the assets is accurate and that there is no false figure mentioned.
Step 5: Scanning the Accounting Records
This is a crucial auditing procedure. Auditors analyze accounting records to look for errors, unusual entries, and omissions. Also, every entry is analyzed to make sure that the data is accurate and authentic. The auditor is to scan the documents deeply to identify any unusual activity like illegal credits or unauthorized debits.
Financial audit strategies that used in large companies are not suitable for small companies. However, an internal auditor can assist the auditing procedures in a large company. Therefore, small organizations often find challenges regarding audit strategies and have to adjust them to have practical audit procedures.
Read More : The Importance of Auditing to Companies.
Regardless of the size of the company, each organization must have functioning financial components. However, the reliance on these components can be different according to the size of the company. If you want to succeed in your business and run it efficiently, you should hire the best auditing companies in Dubai, UAE. Farahat & co. has a team of the best auditors in Dubai.