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Liquidation Audit Services in UAE

Liquidation Audit Services in UAE

Liquidation begins when a company has to make a decision on winding up its business operations due to financial distress. It is a very sensitive phase that requires a lot of professional skills. At Farahat & Co., we render highly customized Liquidation Audit Services as per your company's specifications. In our audit, the auditors look into the books in a manner that every minutest thing regarding all assets and liabilities is checked; all creditors and shareholders are treated fairly and equitably throughout the entire process of liquidation. The liquidation audit brings about proof of honesty on the final financial records of your business. We take this responsibility with the highest professionalism and ethics it deserves. 

Our liquidation audit leaves no stone unturned when it thoroughly reviews and assures complete protection for all parties of interest. Be assured that this sensitive process shall be undertaken with complete diligence and transparency at Farahat & Co.

What is a Liquidation Audit? 

A liquidation audit is an essential audit of the financial records, assets, and liabilities of a company in the process of liquidation. A company ceases all its activities and disposes of all its assets to creditors and shareholders during liquidation. In this process, a liquidation audit is conducted to bring transparency, accuracy, and full compliance with the legal requirements during the liquidation process. At Farahat & Co., we offer outstanding liquidation audit services in the Emirates, designed according to the requirements of a business when it goes into liquidation.

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Significance of Liquidation Audits

 The importance of a liquidation audit in the UAE is mostly due to:

  • Legal compliance: It ensures that the process of company liquidation is within the stipulated regulatory framework.
  • Liquidation Audit: An audit to ascertain whether the financial books are correct and liabilities & assets are accounted for properly.
  • Assurance to Creditors: The creditors, shareholders, and other stakeholders of the company are given assurance that the affairs of the company are being dealt with properly and that the distribution of funds is fair and transparent.
  • Avoiding Complications: If ever the company undergoes liquidation, complications can be avoided with regular financial audits because mistakes or misstatements will make the process very complex. 
  • Reputation Protection: Proper liquidation by audit will save the company, the directors, and the shareholders from blacklisting by UAE government authorities which will in the end affect their business future.

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Auditor's Role in Company Liquidation

In case a company goes into liquidation, an independent auditor is supposed to supervise the process of liquidation. The role an auditor plays in the company liquidation includes: 

  • Verification of the records: The auditor checks the correctness and completeness of the financial position from the documents of the company, including financial statements, ledgers, accounts, and other accounting records of a similar nature. The verification is essential to ensure that they reflect the financial transactions of the company and have been prepared in conformity with the accounting standards.
  • Identification and Valuation of the assets: It is the process through which the company's assets are identified and valued. The auditor verifies the physical assets, such as land and buildings, inventory, and intangible assets in this process. 
  • Liabilities Assessment: The other thing the auditor is going to do is to evaluate the company's liabilities to find the priority of payments. This may be about repaying loans, payables, or other liabilities. 
  • Monitoring the Liquidation Process: The auditor monitors the whole process of liquidation and reviews it for the purpose of establishing whether the proceedings have been conducted in accordance with the statutory requirements and the interests of creditors and stakeholders have been taken care of.
  • Reporting and Documentation: The final report of the audit is written by the auditor after the audit is completed. It is supposed to contain full disclosure of the findings, conclusions, recommendations, and distribution of assets and liabilities.

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The Liquidation Audit Report 

Among all, a liquidation audit report is the most important, and this is being asked by the authorities at the time of the liquidation of a company. It really comes in handy because it gives a very clear and transparent picture regarding the financial health of the company at the time of liquidation. Some of the most important components of the UAE liquidation audit report include: 

  1. Introduction and Background: This includes the corporate overview and the registration of the company's legal status with regard to the industry, and is then succeeded by descriptions of the causes of liquidation. 
  2. Scope and Objectives: This contains the scope and objectives of the liquidation audit, whereby it gives details of the areas examined and the purpose of the audit engagement. 
  3. Audit Methodology: It details the process of the audit procedures and techniques that have been conducted by the auditors to be able to perform the audit, which includes document review, data analysis, interviews, and verification processes. 
  4. Findings and Observations: In this area, the auditor reports the findings of the audit, which are observations, irregularities, discrepancies, or any areas of concern arising from the audit. This will include the issues in the financial records or the problems with the valuation of the assets or the various issues that arose as a result of non-compliance with laws and regulations or from any suspected activities of fraud. 
  5. Analysis of financial position: This is done by conducting a financial analysis of the company, which indicates the assets, liabilities, and the overall financial position. This enables the stakeholders to view the financial position of the company and helps in the fair distribution of the assets to the creditors. 
  6. Compliance assessment: A report on the compliance audit will also be drawn up to examine whether the company complies with all UAE applicable legislation and laws concerning the liquidation of companies, including but not limited to UAE Federal Law No. 32 of 2021 on Commercial Companies, the UAE Bankruptcy Law, Federal Decree-Law No. 9 of 2016, and any other related legislation and regulations. 
  7. Recommendations: Based on the findings and observations, the auditors make recommendations for the liquidator and other stakeholders. Such recommendations may call for process improvement, addressing identified issues, or taking specific actions to protect the interests of the creditors and stakeholders. 
  8. Supporting Documents: The report will normally have relevant documents that support the findings of the audit process. These include the financial statements, legal documents, audit working papers, and other evidence gathered in the course of the audit.

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Why Choose Farahat & Co. for Liquidation Audit in UAE? 

Farahat & Co. is one of the leading audit firms in Dubai, engaged in all the necessary audit services to be conducted in the process of implementing the liquidation. Our independent auditors and business professionals ensure high levels of professional handling and diligence in the audit process. We prepare and submit reports for liquidations before the appropriate regulating body with a lot of diligence.

We are more than happy to provide a full liquidation service solution that includes document submissions for liquidation purposes, the cancellation of utility connections, obtaining clearances, the closure of bank accounts, no-liability certificates, audited financial statements, and final liquidation reports. We also undertake the business liquidation in Dubai, be it on the mainland, in the free zones, and offshore across the UAE.

Contact us now to find out more about our liquidation audits and how they can help you make sure you have a well thought out and navigated process.