Audit Firm in Dubai
An entrepreneur who owns either a small scale business or a large scale business ought not to spend much of his time exploring on the accounting and auditing aspects of a business. Instead, he can spend much of his vigour on recuperating returns, increasing the number of employees or improving his services and products.
Auditing is a technique of evaluating the efficiency of a company's domestic controls. Upholding an effectual system of internal controls is imperative for achieving a company's business objectives, acquiring consistent financial reporting on its operations, putting off fraud and embezzlement of its assets, and playing down its cost of capital. The internal as well as the independent auditors contribute to a company's audit system in different but important ways.
A proper audit helps businesses unearth problems and guarantee effectiveness and provides a high level of assurance.
What is an audit?
An audit is a methodical and sovereign examination of books, accounts, statutory records, documents and vouchers of an organization to make certain how far the financial statements as well as non-financial revelations present a true and fair view of the concern. In other words, it is an examination of an existing system, report, or entity.
What is Assurance Service?
Assurance service is the process of analysing. It is used in the assessment of accounting entries and financial records. Assurance service can be compliance-based or regulatory. Assurance service ensures whether a company follows guidelines, rules and policy, and provides internal and external confidence for financial statements.
The Importance of Audit
The significance of Audit is increasing with the passage of time because there are always more and more things to reconsider and whistle, when things are differing. The businesses become more multifaceted and the management of the companies are playing different methods to beat the market. When the countries or societies are rolling at greater speed with technological developments, new ways of doing things are arising. In order to cover such activities, accounting and auditing has to grapple with the market movements and ensure that stake holders’ interests are well sheltered.
Discussed below are some of the points regarding the importance of an audit.
a) Evaluates the Risk of Misstatement
Without an audit system, a company would not be able to create reliable financial reports for internal or external purposes. Consequently, it would be unable to conclude how to allocate its resources and to know which of its segments or product lines are profitable and which are unprofitable. So, an audit system is crucial as auditors weigh up the risk of material misstatement in a company's financial reports and help the company overcome the stumbling block.
b) Facilitates the Quest for Business Objectives
An effective audit system is significant for a company because it facilitates the company to chase and accomplish its various commercial objectives. Business processes need various forms of internal control to smooth the progress of supervision and monitoring, to thwart and perceive irregular transactions, to gauge ongoing performance, to keep up adequate business records and to endorse operational productivity. Internal auditors reassess the design of the internal controls and casually propose improvements, and document any material irregularities to enable further investigation by management if it is necessary under any circumstances.
c) Cost of Capital
The cost of capital is significant for every company, in spite of its size. The cost of capital is largely comprised of the risk associated with an investment. A better audit system can lessen various forms of risk in an enterprise.
d) Fraud Preclusion and Exposure
Internal audit doles out an important role for companies in fraud anticipation. Frequent scrutiny of a company's operations and maintaining painstaking systems of internal controls can avert and spot various forms of fraud and other accounting irregularities. Audit professionals help out in the design and alteration of internal control systems to assure fraud prevention.
Reasons to conduct an audit:
1. To reassess the acquiescence with a multitude of managerial regulations.
2. To reassure the effectual operation of a business.
3. To retain/augment the status of the business in the community.
4. To execute a “due diligence” review for shareholders or potential investors.
5. To inculcate a sense of buoyancy in management that the business is functioning well and you are prepared to meet potential challenges.
Different types of audits
a) Internal Audit
Internal audit is an autonomous, objective assertion and consulting activity designed to add value and improve the operations of a business. It helps a business to achieve its objective by bringing a systematic, disciplined approach to appraise and advance the efficiency of risk management, control and governance process.
Purpose and Scope of Internal Audit
The purpose and scope of internal audit activity should be aptly broad to meet the need of management to achieve its objectives. An internal audit includes:
- Re-evaluation of each control and analysis in terms of costs and benefits
- Reassessment of the existing system of controls to determine whether it is in synchronization with the structure of the organization.
- Reassessment of the steadiness and sincerity of financial and operating information and the means used to recognize measures and to categorize and report such information.
- Reconsideration of the means of preservation of assets and authentication of the existence of such assets.
b) Tax Audit:
This is an examination of the tax returns submitted by an individual or business entity to see if the tax information and any resulting income tax payment are valid.
c) Compliance Audit:
This type of audit is an examination of the policies and procedures of an entity or department to make sure if it is in compliance with the internal or regulatory standards. This audit is most commonly used in regulated industries or educational institutions.
d) Construction Audit:
This audit is an examination of the costs incurred for a specific construction project to ensure that the costs incurred for a project were rational. It may include activities such as scrutiny of the contracts granted to contractors, prices paid, overhead costs allowed for settlement, change orders, and the appropriateness of completion.
e) Financial Audit
Financial Audit is a scrutiny of the even-handedness of the information contained within the financial statements of a business entity. This is the most common type of audit conducted by a Certified Public Accountant (CPA) which is independent of the business under review.
It implies examination of the books of accounts and other relevant records. This will provide the auditor necessary information to give his opinion whether the accounts are properly maintained and complied with necessary statutory accounting or financial reporting and auditing standards.
The basic objective of a financial statement audit is to provide an independent or third-party assurance that the management has, in its financial statements, presented a “true and fair” view of a company’s financial performance.
What is the purpose of conducting a financial statement audit?
- To ensure what is reflected through balance sheet / statement of financial position or Profit or Loss Account is reliable or not.
- To add credibility to the reported financial position and performance of a business
The Process of Financial Audit by CDA in Dubai
- the amount of audit needed
- the understanding of the organization and the businesses related to it
- the tasks and procedures performed in it
- the assessment of the risk of mistakes in the financial statement
- identification of the time limit required for the completion of this process.
2. Financial audit tests:
- the understanding about the organization by applying different audit tests
- the review of the invoices that are associated with all the expenses
- review to clarify that the expenses are classified correctly and the vender actually exists
3. Account analysis:
- checking all the details of the account and its accordance with the information present in the documents.
- documentation of the reasons behind the changes in the accounts since the last audit
- research and information gathering to justify those changes
4. Preparation of audit report
- the information about the organization
- the tests that are being used
- the details of financial statements.
- the weaknesses in the internal control processes or any issues which still need elaboration.
- submission of the audit report to the higher authorities after completion.
f) Information Systems Audit
It involves a review of the controls over software development, data processing, and access to computer systems. The aim is to spot any issues that could damage the ability of IT systems to provide accurate information to users, as well as to ensure that unauthorized parties do not have access to the data.
g) Operational Audit
This is a detailed analysis of the goals, planning processes, procedures, and results of the operations of a business.
h) Investigative Audit
This is an examination to locate and remedy control breaches, as well as to collect evidence if charges are to be brought against someone.
What is the Audit Period?
- 6 to 18 months for new entities
- 12 to 15 months for Free Zones.
Usually, the external audit is conducted annually. If the management of a company needs special purpose audits, it can be carried out for a different period or even number of years.
What is the significance of Audit in the UAE?
Auditing has become almost obligatory in the UAE both in the free zones and in the main land. The authorities insist filing of audit reports as compulsory requirement for renewing the license of the company in the Free-zones. Annual audit is required to be done in the main land as per UAE commercial company law. The banks insist filing of audit report for continuing the finance facilities wherever they have financed materially. Occasionally, suppliers or customers or other stake holders ask financial audit report. After the execution of the UAE VAT, the management of a company will have additional responsibility to corroborate the revenue through the audit report.
An audit firm in Dubai, UAE helps in measuring the financial stability of a company. It helps a business owner to form an opinion about the current processes of a business and also helps in making decisions about the future of the business. The audit report provided by audit firms outlines a precise and complete picture of the financial health of a company.
Here are some of the major reasons why a business needs to hire a top audit firm in Dubai:
- Fortification against the attempt to defraud investors
- Precision in financial statements
- Proficiency and knowledge
- Absolute loyalty to existing governmental regulation
- Corroboration of internal controls
Auditing and Assurance service with CDA in Dubai, Abu Dhabi, UAE
Audit and Assurance is the assessment of a company’s accounts to institute trustworthiness with the financial information for the benefit of the owners and shareholders of the company to make better decisions. According to Federal Law No. 2 of 2015 or the UAE Commercial Companies Law, every company is requisite to allocate a licensed auditor that is registered under the Ministry of Economy for the auditing of their financial affairs.
CDA offers the complete range of Audit and Assurance services to meet the business needs of the customer in this vibrant global environment. Other than this, CDA offers BookKeeping Services, Financial Advisory Services, Tax Consultant Services, Internal Audit For Company and other tax related services.
Do contact us. The CDA experts will ensure that your company’s accounting and auditing process grapple with the market movements and that the stake holders’ interests are well protected.