Is financial audit compulsory in Dubai? Can I use an external auditing company in Dubai? What does an auditing service company in Dubai do? These are only a few of the questions that come to the minds of most business owners in Dubai. We've collated a list of the most commonly asked questions about auditing services in Dubai so that you can make an informed decision on this topic.
What does an auditing service company in Dubai do?
The minimum basic service that any auditing service company in Dubai must do is a basic audit. This means examining the company's financial report, as presented in its annual report, by a person/entity independent of that company. The financial report usually comprises a balance sheet, income statement, statement of equity changes, cash flow statement, and notes summarizing significant accounting policies and other miscellaneous explanatory notes. The main objective of carrying out an audit is to establish whether the company's information in the financial report reflects the company's financial position at a given date. These include
Whether details of what is owned by the company and what the company owes are accurately recorded in the balance sheet.
Whether the company's profits and losses are properly assessed.
While examining the company's financial report, all auditing service companies in Dubai must follow auditing standards that have been set by the UAE/Dubai government. After the auditing service company has completed their work, they will prepare an audit report that details what they did and the opinions or conclusions they reached. All listed companies and limited liability companies in Dubai must comply with an annual audit. Other Dubai companies may require or request an audit conditional on their structure and ownership.
What doesn't an auditing service company in Dubai do?
An auditing service company in Dubai is not expected to
Audit other types of information presented to company members, for instance, the directors' report.
Examine each and every figure in the financial report – audits are solely based on selective testing.
Assess the appropriateness of the company's business activities, strategies, or decisions taken by the directors.
Investigate every transaction carried out by the company.
Test the competence of the company's internal controls.
Point out the quality of directors/management, corporate governance, risk management measures, and controls to shareholders.
What can't an auditing service company in Dubai do?
They cannot forecast the future. Any audit conducted on a Dubai company relates to a specific accounting period in the past and cannot foresee the future. No audit company in Dubai is expected to assure that the company will remain in business for the foreseeable future.
- None of the audit firms in Dubai can be on-premises all the time. An audit is carried out during a specified timeframe, and auditors cannot be at the company all the time. The primary purpose of an audit is to develop an opinion based on the information in the company's financial report taken as a whole. They cannot be expected to identify all possible financial irregularities. Even though auditors will keep their eyes open for potential material fraud signs, it is impossible for them to identify each and every instance of fraud.
How does an auditing service company in Dubai conduct an audit?The following steps are involved in any audit
The appointed Auditors will examine books of the company financial and recheck all accounting entries.
Any expenditure made by the finance department is aligned with the company policies or not, whether the finance department had taken any approvals or not!.
The company management prepares their financial report following legal requirements and financial reporting standards set out by the UAE authorities.
The company directors approve the financial report.
Auditors/audit firms prepare for the audit by understanding the company's activities and considering the economic and industry issues that could have impacted the company during the specified reporting period.
Auditors/audit firms recognize and assess any risks for each major activity listed in the financial report, which could substantially affect the financial position or financial performance, and the measures or internal controls that the company has in place to mitigate those risks.
The auditors/audit firms study what the company management does to guarantee that the financial report is accurate and examines the supporting evidence/documentation.
Based on the risks and controls identified, the auditors/audit firms then ascertain whether the financial reports taken as a whole portrays an accurate and fair view of the company's financial results and position, its cash flows, and its compliance with established financial reporting standards and, if relevant, the Corporations Act.
Lastly, the auditors/audit firms in Dubai prepare an audit report comprising their opinion for the company's shareholders or members.
What precisely does an audit company in Dubai do?
Auditors will discuss the work scope of the audit with the company stakeholders. The organization's directors or management may ask for additional processes to be carried out. However, during the entire audit process, the auditors/audit companies in Dubai have to uphold independence from the company management/directors to maintain objectivity while carrying out the tests and forming their opinions. Auditors/audit firms have the freedom to decide the kind and extent of the audit procedures they need to execute based on the risks and controls they have detected. Some of the more common audit procedures in Dubai include:
Asking a range of individuals at the company several questions ranging from formal, written inquiries to informal, oral queries
Inspecting the financial and accounting records of the company, other supporting documents, as well as tangible items such as plant and equipment
Formulating judgments based on the estimates/assumptions that management made while preparing the financial report
Procuring written confirmations on specific issues, i.e., requesting a debtor to confirm the amount of their debt with the company
Testing some of the company's internal controls
Observing specific processes or procedures being executed
Why Avyanco for Audit Services in Dubai
At Avyanco, we start each audit process by gaining a complete understanding of our clients, their business processes, and their specific requirements, with the intent to guide them from A to Z with our exclusive and comprehensive audit services for Dubai-based companies. Our team of audit experts can help you breeze through the complexities of audit processes in Dubai. Reach out to us for all your auditing needs in Dubai Call/WhatsApp: +971 50 3989000, (T):+97142405000, Email: email@example.com