A financial audit is a type of objective evaluation of a company’s financial reports and reporting processes. The primary focus of financial auditing is to assure the investors, regulators, directors and the managers that the financial statements are complete and accurate. This auditing process provides assurance only, it is not a guarantee.
With the usage of different audit procedures i.e. observations or interviews, the auditors will determine if the financial records are reported properly or not. If all the controls or processes are accurate then the auditor will conclude that the financial statements are accurate. Still, there can be a chance of error or mistake. The process of financial audit in Dubai is as follows:
Step 1: Planning:
The auditing process requires proper planning for the process. It will include the amount of audit needed. This will depend on the size and the departments in a company. The planning process will also involve the understanding of the organization, the businesses related to it and the tasks and procedures performed in it. The auditor will plan about the way in which the audit process will be completed, ratio analysis or the documentation process. The process of accessing the risk of mistakes in the financial statement will also be planned. Based on this planning, the auditor will identify the time limit required for the completion of this process.
Step 2: Financial audit tests:
Whenever an auditor is going to start the auditing process, he will get the understanding about the organization by applying different audit tests. He will also review the invoices that are associated with the all the expenses, to clarify that the expenses are classified correctly and the vender actually exists. The type of audit test which is to be applied to a specific organization will be identified in the planning process.
Step 3: Account analysis:
In the account analysis process, the auditor will check all the details of the account and its accordance with the information present in the documents. The auditor will document the reasons behind the changes in the accounts since the last audit. The required research and information gathering will also be done by the auditor to justify those changes.
Step 4: Preparation of audit report:
After the testing and the analysis procedure, the auditor will prepare an opinion report. This report will contain all the information about the organization, the tests that are being used and the details of financial statements. It will also contain the weaknesses in the internal control processes or any issues which still need elaboration. The report will be submitted to the higher authorities after completion.
The whole process of financial auditing depends on the nature and departments in the organization. After the completion of the report, the auditor is responsible for getting the signatures of the management on the reported information and financial statements.