An audit can be seen either as an unwanted procedure or a desired opportunity. The former is because of the hassle that preparation brings when an audit is needed. The latter is because of the fact that it is an eye-opener for people. Because of the things that they can learn about their company and what they need to improve still.
It has mandated by the UAE government for companies to conduct a yearly audit in their company. For those organizations that are not necessary to undergo audits, like those in the free zone areas. They conduct external audits anyway with the help of auditing firms in Jafza or auditing firms in Dafza or auditing firms in Saif zone.
Find more detail: Tax Audit: What You Need to Know
Why Do You Need an Audit?
As mentioned above, most companies in the UAE are under the mandate of the government for them to have yearly audits. But some still undergo external or internal audits based on their higher-ups’ decisions.
Audited financial statements are needed and necessary in order for a company to be considered by banks, lending institutions, creditors, etc. for their request for loans. Investors also looked for them in order to be convinced why they should invest in the said company. These audited financial statements are also asked by authorities based on their own discretion.
Basically, owners decide to have audits to have their financial statements be assessed to ensure that what they present are correct and fair. This can done internally or externally. The former is conduct by an internal auditor who is someone. Who is part of the company and well versed with the country’s and company’s standards to check if they align. The latter is conducted by an external auditor who is hired by one of the auditing firms in UAE. It should be that this auditor does not know anyone in the company in which they will conduct an audit.
What are the Five Steps in an Audit Process?
There are a few steps that should be done in order to have a successful audit process in a company.
1. Preparation of Documents
When an agreement between a company and a third-party firm with regard to an external audit that will commence on a given date, the third-party firm that will provide an auditor will request necessary documents.
There can be a checklist that is given to a company for the upcoming audit that has all the documents needed for the audit.
The papers that may be needed are a copy of the previous audit report, financial statements, ledgers, bank statements, receipts, etc. There are other documents that may be requested by an auditor. Some of them may be copies of minutes of board committee meetings, company regulations, etc.
Read more: The Process of Financial Audit in Dubai
2. Prepare for the Audit
A company will be given a date by the auditor on when the audit is going to commence. Both parties prepare for the said audit. The company will prepare every area of their company that needs to be audited. In the same sense, the auditor will prepare himself in auditing the said company by looking over the information on the documents received by him.
3. Commencement of audit
When the day for the audit arrives, it usually is quite a tense day for the whole company as they have to be in their best state. Employees that needed to interview for audit purposes are especially nervous as they need to answer clearly and be knowledgeable about their field.
Compliance with the company, jurisdiction, and country policies checked, including internal controls, and of course, the financial statements, and even the software applications that are used for their accounting department.
4. Report Preparation
An audit usually lasts for a day or two depending on the plan that has been made by an auditor. Once done, the auditor needs to prepare a report that details all their findings. And the solutions that are best to done in order to handle the errors or discrepancies found.
5. Closing Meeting
A meeting at the end of the audit happens between the auditor and the company’s management in order to discuss the said audit that has concluded. The management and the auditor discuss the findings and solutions given by the auditor.
Leading Audit Firms in Dubai
Auditing does not need to be an unwanted process. With one of the top audit firms in Dubai, like Farhat & Co., you can be sure that your audit process will not be as tedious or tense as what you have been accustomed to.
There have been a number of companies from various industries that Farhat & Co.’s auditors in Dubai have audited. However, we have experience and knowledge in our sleeves.
You can contact us today and book a free consultation with one of our auditors in Dubai for you to find out more about the audit.