How Proper Auditing Resolves Partnership Concerns?
As we all know, the disputes among the partners are common and often lead to loss. In every firm audit is a compulsory one. There are many advantages of getting the accounts; audited, nowadays many firms make a provision for audit in their Partnership Deed. In partnership firms, the accounts are audited within the interests of the partners and then considered as most desirable. The amount of dispute cases among partners is increasing to quite an extent and is risking the firms also. This will raise serious concerns for businesses by risking the financial investments they need to be contributed to achieving progress. After business in partnership is made, most of the days when some issues come up, the non-serious attitudes of all the partners towards resolving disputes, make the items get worse.
The external audit means that the independent examination and expression of opinion on the financial statements of an entity. The first role of an external auditor is to report on the reality and fairness of the financial statements of an entity on behalf of its owners, the shareholders. The aim of an external audit is to enhance market confidence and trust in financial information. External audit programs typically specialise in financial reporting and associated processes and matters which may end in material weaknesses, financial control weaknesses, or misstatements that comprise a bank’s financial statements. Outsourced/co-sourced internal audit activities aren't considered external audits. An auditor is an external party so that there is no chance for bias on the report. The report of an external auditor is an independent report.
Audit programs may comprise several individual audits that provide various sorts of information to the board of directors about the bank’s economic condition and therefore the effectiveness of control systems. The foremost common sorts of audits are operational, financial, compliance, information technology, and fiduciary. The external auditor is more professional and an experienced team of auditors will help to find out any fraud or any misrepresentation in a financial statement. An independent auditor is free from external influence or bias and is therefore ready to maintain integrity, make objective judgements and exercise appropriate professional scepticism during the audit. Auditors must suit the Code of Ethics for Professional Accountants or equivalent, including maintaining the independence of mind and appearance, meaning that auditors must not only act independently but even are seen to be independent.
The auditor thoroughly analyses the following:
- Nature of the business and accounting year of the firm.
- Capitals contributed by the partners and share ratio agreed between the partners.
- Rates of interest on capital and drawings and Interest on loans from partners.
- Salaries or remunerations or commissions if any allowed to the partners.
- Borrowing powers possessed by the partners.
- Basis of valuation of goodwill and its treatment within the books of accounts.
- Settlement of accounts at the time of dissolution.
- Other limitations on the powers of the partners.
Advantages of Audit to a Partnership Firm
1. Partners can get an unbiased and independent opinion on the true state of affairs of the financial position of the firm.
2. Auditing services will help within the maintenance of up-to-date accounts also as within the detection and prevention of errors and frauds. It’ll make sure the drawings from the ultimate accounts as per the terms and conditions of the partnership agreement.
3. At the time of admission, retirement, or death of a partner, and sale of a business, the valuation of goodwill and therefore the settlement of accounts become very easy.
4. Audited accounts are considered reliable and help the firm in negotiating a loan from the financial institutions, and also for the assessment of taxes.
5. Helps in allocating profit and partition of dividend during the year.
6. Helps in advertising a better investment opportunity.
The term assurance refers to the expression of a conclusion by an assurance practitioner that's intended to extend the arrogance that users can place during a given material. An audit may be a sort of assurance engagement which provides an opinion giving reasonable assurance on a financial report. The external auditor gives credibility on assurance. Therefore, an auditor’s report provides a conclusion that increases the arrogance that users can place during a company’s financial report. There are different levels of assurance, which end in differing types of conclusions, counting on the sort of labour that the reassurance practitioner performs. An audit may be a sort of assurance providing reasonable assurance of financial information. Assurance may provide either reasonable or limited assurance on a good and expanding range of topics. The reassurance provider should aim to be independent of reporting organizational restructuring and impartial with reference to the organisation’s stakeholders. Any interests that detract from this independence and impartiality got to be transparently declared by the reassurance Provider. Audit quality is challenging to define, measure and observe as most of the precious work auditors do happens before a company’s financial report is released to the general public. As audit quality is difficult to live and evaluate, shareholders and other stakeholders largely believe the board and audit committee to satisfy them that the auditor provides sufficient audit quality to offer confidence within the auditor’s report.
Why choose CDA?
CDA external audit services in Dubai are tailor-made to meet the requirements of the clients and to comply with the audit laws of the UAE. We provide legitimate conclusions to your business that help to keep a better position in the competing market. Our team is experienced in Big4 and leading auditing firms in Dubai. The team has good experience in a wide portfolio of industries. Our multi-tasked team who are working as CFOs for different MNCs will help internally for the decision making as well.
You may also read, How do Internal Auditors add value to the business
In addition to external audit services in Dubai and UAE, CDA also provides Business strategy & CFO services, Accounting Services, Auditing & Assurance Services, Vat & Tax Consultant Services, Implementation of Accounting Software Services and Due Diligence Audit Services. If you need any help with external auditing service in Dubai, feel good to contact us. Our expert auditor will call you back immediately and will offer you a one-hour free consultation.