Reasons to Avail Audit Services in Dubai
For any company operating in the UAE, irrespective of the size of their business, it is compulsory to have an audit process in place. An audit is an important service that helps a company assess its financial health and take the proper measures for growth and development.
How an Audit helps a business?
An audit is the periodical inspection of the books of accounts of a company. Auditing helps to find out the financial health of the organization. Moreover, auditing certifies the profitability figures released by the Finance and accounts department.
It also checks all the business documents and ensures whether they comply with the regulatory authorities. By providing a precise and complete picture of the business to the Management, an Audit report provides an unbiased picture of a company's financial health. It studies the existing internal controls and standard operating procedures to determine whether they are correctly carried out.
Both Internal and External Audit Services conduct auditing at different intervals. While internal audits are more frequent and tend to point out the deficiencies to the Management in a friendly manner, external audits are stricter. They are the sole certifying authority of a company’s Balance sheet and financial profitability. The role is more critical as they are answerable to the regulatory authorities, shareholders, and Stock exchanges. When institutional investors or banks have to take exposure to the company, they rely on its audited financial reports.
Different ways in which an audit can help a company
- An audit helps in assessing the risk management of the business. The auditors review the company's workings and point out the flaws and weaknesses for remedial action.
- An audit helps to find out any fraudulent activities that may have been committed by either the employees, vendors, etc.
- The auditors assess the tax implications of transactions done by the company and make the Management aware of it. Any wrong filing of taxes, tax violations, penalties is highlighted. This prompts the Management to appoint a Tax Agent in UAE and ensure that they represent the company before the authorities for any representation. Tax audit firms usually provide these services.
- Business audits focus on the company's business and financial status, and their recommendations provide insights into company expansion plans.
- Audited financial reports help to increase confidence in the stakeholders of the company, including shareholders and investors. Audited financials are more reliable to external parties who may be interested in providing funds to the business.
Any prospective buyer of an existing company will look at the audited Balance sheet of the company. Once they feel that the company is worth taking over, they conduct their due diligence exercise. Due Diligence Auditing in UAE is mandatory for verifying the financial details provided by the Management to the prospective buyer. An audit gives extra assurance to the buyer and confirms that the data provided by the company.
The above are some of the benefits of an auditing process. It is a regular exercise and helps to give a clear picture of the business to the Management. Large organizations have an audit Management committee at a senior level that takes note of the auditor's report and follows up on taking corrective actions.
If one is a new company in UAE and wants to get their business audited, they must comply with some rules and regulations specified by the UAE government.
The Audit requirements are:
- Free Zones in UAE, where a foreign business has its branches, may not require an audit. Still, for local companies, an audit of the books is compulsory.
- All financial books and documents of a business are required to be maintained as per accounting standards.
- Mainland companies in UAE are compulsorily required to audit the books. The UAE Commercial Companies Law also needs companies to maintain their financial records for a minimum period of five years.
- Some free zones in the UAE do not require the audited documents to be submitted to the authorities. However, audits and keeping the reports are necessary.
- Audited reports are required to be completed after the end of a financial year. Auditors usually have three to six months to complete the audit report and submit it.
An audit process is beneficial for the health of a company, and it should be done regularly by both internal and external auditors. The new business-friendly environment provided by the UAE government has resulted in a boom in the economy. With an increase in new businesses in both the mainland and Free Zone, a massive demand for audit Firms has come up in Dubai. Many audit firms have a team of professional auditors who provide Review operations, policies, and procedures and assist Management in establishing better policies and procedures.