Audits in UAE are often conducted by internal/external audit departments and the regulatory authorities in the UAE. During an audit, financial statements of a business are reviewed to show whether or not they show what's referred to as a "true and fair" view with regards to the company performance, and if they've been prepared accordingly or within accounting standards. An audit in UAE that is done by regulatory bodies such as the Federal Tax Authority is also to identify material misstatements and full regulatory compliance of an audited entity.
What exactly happens during an audit in UAE?
There are different types of audits in the UAE. But, all of them involve these three primary stages of audits:
Performing the Audit program
This is when the actual auditing takes place. An auditor assigned to you by the local authorities or the professional you have hired for external auditing in Dubai, UAE will collect, assess, then interpret data. This is to gain a complete understanding of the activities of your organization. For every major activity that is listed in financial statements, an auditor has to identify then assess risks that may have a significant impact on the financial position or performance of the organization.
An external auditor in UAE, in particular, looks for irregularities. It can include company manipulation with its financial performance in order to mislead investors. It can also be to delay disclosure of future financial performance.
Gathering of Evidence
External auditors in Dubai UAE, which are best hired to ensure full regulatory compliance in UAE, will obtain evidence to satisfy successfully the requirements for an audit program. It's going to include confirming full compliance to accounting policies, verifying assets of an organization that is purchased, and examining accounting records.
This is done by an internal auditor, external auditing firms in Dubai, UAE or the appointed officer for a regulatory audit. The auditor will submit financial reports that state their objective professional opinion. Scope of audit, as well as the outcome, are going to be outlined in the reports. Findings of external audits often influence a company's reputation. There's a couple of serious consequences for conclusions that don't match the statements of the organization. This is most especially on its assets, debts, payments, and tax responsibilities.
You must read: What Are the Audit Procedures to Verify the Fixed Assets?
What are the tasks of auditors during an audit in the UAE?
An auditor is tasked in exercising professional judgment and maintaining professional skepticism all throughout an audit service. An audit firms in Dubai, UAE also does the following:
- Evaluate the appropriateness for all accounting policies that are used by the organization, as well as the reasonableness for each accounting estimate and related disclosure which was made by a company director(s)
- Come to a conclusion on the appropriateness for the use of a director of a going concern basis for accounting and whether material uncertainties exist related to conditions or events which may cause significant doubt with regards to the ability of an entity in continuing to be a going concern
- Evaluate the overall structure, presentation, and content of company financial statements, including disclosures, as well as whether or not the financial statements are representing all the underlying events and transactions in a way that achieves a fair presentation
- Obtain sufficient audit evidence with regards to financial information of entities within a group in order to express a professional opinion on consolidated financial statements
You must know: How Audit Firms in UAE Detect Fraud in Company Balance Sheet
What does an auditor check to form an opinion on company financial statements?
In order to form a professional opinion on the company financial statements, the auditor will evaluate whether:
- the financial statements refer to the applicable framework for financial reporting
- the accounting estimates that were made by the director(s) are reasonable
- the information that should've been included was included and data was appropriate aggregated, classified, characterized and disaggregated
Why do businesses need External Auditors?
External auditors in UAE are not mandated to be contracted by businesses in the country. However, it is best to hire an independent or external audit firm in Dubai, UAE to conduct a thorough audit to prepare for a scheduled audit that will be done by the local authorities. This is to ensure that organizations don't acquire hefty administrative fines and severe penalties from uncovered issues during a regulatory audit.
Organizations in UAE also hire external auditors to have a clear and objective assessment with the financial standing of their businesses. As external auditors in UAE don't have developed relationships with the organizations that they're reviewing and auditing, they're certainly not biased. What this means is that they're objective all throughout an audit process. It will translate to more accurate data for an organization that wants to assess its progress or the lack thereof.
If you want to know more about our audit service in Dubai, UAE, call us here in Farahat & Co today!