An annual financial audit can be an invaluable tool for uncovering potential financial intricacies in business conduct. A financial audit is a comprehensive review of an entity’s financial records to identify whether they are in compliance with applicable laws, regulations, and standards. It includes checks on the accuracy and completeness of financial data, as well as other factors relating to the entity’s financial position. Audit firms in Dubai perform annual audits on both public and private companies. In addition, they offer advisory services such as management advisory services, forensic accounting services, tax advisory services, and forensic accounting services.
Requirements for Commercial Companies Under Law
From a legal perspective, the jurisdiction in which the company is established will determine whether a Dubai or UAE corporation needs to have its financial accounts audited. The legislation will state whether or not an audit of a Dubai or UAE firm’s accounts books is required.
Corporations that are registered on the UAE’s mainland and in Dubai must abide by the Commercial Companies Law. The following criteria are mentioned in Chapter 2 of Article 27 of the new UAE Commercial Companies Law, Federal Law No. 32 of 2021:
- Every corporation must have one or more auditors to annually review the books.
- A financial report and a profit and loss statement must be included in the annual financial records that the corporation must prepare.
- To provide a precise and transparent idea of revenues and losses, the corporation must use International Accounting Standards and Practices when creating its periodic and annual reports.
Businesses operating in free zones must adhere to their specific free zones’ requirements.
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Guidelines to Prepare for an Annual Audit in UAE
The following guidelines will help you get ready for your annual audit:
Executing an Audit
Collecting and evaluating data is part of audit executing fieldwork, which is largely done to ascertain whether the organization’s internal controls are functioning properly. Execution often comprises communicating with corporate authorities, reviewing papers, acquiring data, etc. to produce audit reports.
It’s important to remember that when performing annual financial audits, particularly if it’s the first time, the pressure might result in serious issues. Everyone wants to achieve while making the best use of the little time. So, it’s important to pick a capable team when delegating tasks.
Planning an Audit in a Well-organized Manner
Time is saved and success is accomplished with preparation and organization. Prior to your team performing the financial audit, make sure to organize everything. Help your teammates improve their abilities to prevent mistakes, and if mistakes are found during assessment, make an attempt to charge appropriately. It’s critical to communicate clearly in these situations, and the best course of action is an explanation.
To successfully compete for the audit within the allotted period, creating a strategy and thorough methodology is crucial.
Request the Client-prepared List in Advance
The corporation will get a prepared-by-client (PBC) list from the auditor shortly before the audit and following the conclusion of the fiscal year. This is expected to be rather long and will include most of the documents that the auditor needs for the audit.
This can require some time to assemble all of the demands for papers at once, including the trial balance, bank accounts and reconciliations, inventory records, and numerous others. You can incorporate meeting these demands into your year-end procedures by acquiring the PBC list beforehand. By doing this, you will avoid needless repetition of effort and ensure that everything is available when you need it.
Carry Out Annual Reconciliations
Reconciliations that are left unfinished until the last moment will only serve to lengthen and complicate the audit. The finance department should do reconciliations on a quarterly or monthly basis to prevent this. Any discrepancies will be flushed out earlier as a result, giving you plenty of time to rectify problems before the audit begins.
In any company operational documentation is essential. The preservation of all documentation is a crucial component of creating an annual audit report. All payroll records, bank accounts, transaction information, trial balances, VAT return filings, loan statements, contracts, and other vital documents are among them.
Digital accounting and invoicing software have made it much simpler for businesses to record and organize the documentation that will be needed in advance of starting to prepare an audited financial report. Since most of this is computerized, your accounting department will have less work to do.
As an alternative, you can scan your documents and upload them to the cloud to keep them digitally. This implies that at the end of the fiscal year, you won’t have to dig through filing cabinets to find the information you require because it will be easily accessible digitally.
Ask Questions and Don’t Leave Anything to Chance
Review the complete PBC list after receiving it from the auditor to ensure that you are aware of all the demands made of your business. Before the audit begins, ask questions if there will be any things you don’t comprehend. The auditor will be pleased to answer any queries you may have, and speaking with them beforehand can even enable you to pinpoint more effective procedures.
Prepare for the Audit
Give the audit ample time, and make sure all of the essential personnel are available when needed. This entails ensuring that your accounting and finance team has a flexible schedule when the auditor is conducting fieldwork and that they haven’t scheduled any time off during the audit.
Prior to the financial audit itself, you will have given the auditor a large portion of the needed paperwork. However, they will be looking for more information and data than just the numbers in order to have a full overview of your company. A delay in responding to inquiries will certainly lengthen the procedure.
Analyze Organizational Alterations
If the corporation has undergone for an audit before, it is very important to check how the financial status changed since that time. The annual auditing procedure may be significantly impacted by fresh investments in projects, as well as by grants and government backing.
It is highly significant for corporations to avail the services of top Audit Firms in Dubai to conduct an effective financial audit. Thus, get in touch with us today and we shall be happy to assist you!
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