A financial Audit is carried out as an activity to appraise a company’s financial statements and ensure their integrity. The outcome of the auditing services carried out is an attested audit report by the auditor which reaffirms the fact that the company has submitted an authentic, fair, and unbiased statement that is in compliance with the financial reporting standards. The main objective of the audit reports is to add eminence to the financial position and performance of the business. With the aid of audit services, a company can be able to touch basis with valuable financial insights into business operations.
A Financial Audit and audit report assists in pointing out the drawbacks that internal management of the business might be having. It further focuses on the critical insights that motivate business decisions to tackle and avoid current and future probably threats. In the competing and ever-evolving financial market, an audit firm in Dubai is expected to do the same at the core level of its services.
Audit of Financial Statements
As stated briefly above, a financial statement audit ensures that the preparation of the former is done in light of standards set by GAAP, IAS, and IFRS. Audit firms in Dubai are expected to study the statements with prime expertise and increased surveillance in order to create an accurate and authentic audit report. Firms mainly offering auditing services in UAE do so by gathering the required evidence and ensuring that audit procedures are being performed as per standards. Financial Statement services carried out by the audit firms include an audit of:
- The balance sheet is a type of document that depicts the financial position of the company in detail. consisting of three major components:
- An income statement is also otherwise known as a profit or loss statement which analyzes the company’s financial performance in terms of net profit or a net loss. Two vital elements of income statements are:
- Cash Flow StatementIngoing and outgoing movements in cash and bank balances over a period are recorded in the cash flow statements. Three major activities recorded are as follows:
- Operating activities
- Investing activities
- Financing activities
- Change in Equity StatementThe statement of changes in equity demonstrates the details of the movements in owner’s equity. Its measurement can be done by relying on the following:
- Income Statement
- Dividend Payment
- Gains or Losses
Financial Audit Services
Financial Audit services are far more complicated and have more compliance needs than one would think. Scope of work, expectations, and consequent document needs, all vary depending on the nature of the business in question. In general and broader terms following are the most concerning services that are part of financial audit services carried out and provided by the audit firms.
- Internal Audit ServicesInternal Audits assess a business’s internal controls that form the most part of the basic operational structure including corporate governance and accounting processes. The main purpose of internal audits is to ensure compliance with standards and regulations is in place and furthermore add value in aiding the preparation of financial statements in a timely manner. It is vital for internal auditors to ensure the accuracy of financial reporting and data collection as well.
- Statutory Audit Services are an obligation for every private and public company to go through a statutory audit. The nature of the business and its annual turnovers are not a point of consideration, these businesses are required to have their annual accounts audited every financial year.
- IFRS Advisory ServicesIFRS, commonly called International Financial Reporting Standards are globally recognized financial standards set in place by IFRS Foundation and IASB, International Accounting Standards Board. They map out a standardized way of depicting a company’s financial performance so that each company’s financial documents are understandable and acceptable irrespective of the boundary limits in the world.
- RERA AuditRERA is the Real Estate Regulatory Agency that monitors, regulates and licenses formulate operations and matters related to Real Estate in Dubai. Real Estate companies need to get the audit done by federally approved auditors to meet with compliance needs. Approved auditors can carry out the escrow audits for property developers on off-plan sales and budget reviews for the Owner’s Association.
External Financial Audit Process
The external Financial Audit process is a complex and sensitive one that needs to be carried out keeping in light all the standards and regulatory requirements. In any industry, for any business audit services will be performed in the following manner:
- Planning audit firms in Dubai will plan and carry out their audit services in a way that will bring assurance to the fact that financial statements are prepared within compliance scope and are free from any material misstatements. This is the initial stage of the process that evolves into further actions, audit firms will have to meet with their clients, sign the engagement letter, determine the scope and objective, will plan their resources and timings, do an internal control review, and will finally move ahead with auditing services program.
- ImplementationWith the supporting documents as evidence all components of the financial statements of a business will be examined, but on a test basis. Accounting policies and procedures are then perused to comply with the required legal and other standards. In the normal course of action, a test of controls will be performed followed by a test of transactions which will finally lead to a review and supervision process.
- CompletionAuditor’s Report is then prepared and reviewed along with the financial statements, where opinions are expressed on the statements. Ideally, audit firms will discuss with their clients the shortcomings found in the statements and will also provide suggestions on how to tackle them and as per an overall objective improve the financial health of the business. Audit working papers will be documented in order to draft reports, which will be released as the final audit reports after an encounter with a client.