Top Reasons to Get an External Audit Done in Dubai
The favourable business environment coupled with great planning of the UAE government has not only helped the economy to grow but is also the key reason for an upsurge in the number of businesses. This has in turn created a huge demand for various bookkeeping, accounting and audit firms in Dubai.
WHAT IS MEANT BY AN EXTERNAL AUDIT?
An external audit is a process whereby the financial health of a company is checked and inspected. It helps the entrepreneurs to do a reality check about the how the business is operating and also enables in making future decisions about the business. An external audit report helps in providing a comprehensive and precise snapshot of the company’s financial health and it is believed to be one of the most key documents that an investor wanting to invest in the company would look for. There are various categories of audit, such as internal, external and statutory audit services.
An external audit firm’s main objective is to scrutinise the financial statements of a company to decide if the statements they have prepared are accurate and made in compliance with the International Financial Reporting Standards. An external auditor typically evaluates the financial statements to make sure that the company portrays a ‘true and fair’ picture of their financial standing. There are various audit firms in Dubai who have expertise in external audits and can aid a business in preparing their company’s annual financial statements perfectly.
THE KEY REASONS WHY UAE BUSINESSES SHOULD PERFORM AN EXTERNAL AUDIT:
It is always helpful to appoint an External Auditor for reviewing the company’s financial statements and to gauge if they are compliant with the regulations and set standards. An external audit agency can find the particular items in the books of accounts that do not comply with the governing regulation. It is beneficial to employ an external auditor as that helps provide an unbiased feedback, which can help a company to modify its financial statements and be compliant with the set rules and regulations.
External auditors inspect the financial reports of a business and bookkeeping records also to notify the management if there is any suspicious activity or any dubious transaction. It also provides proper advice if any of the transactions or activities performed by the business can put the company at risk of probable fraud. External Audit firms in Dubai perform extensive research to identify possible risks and financial crimes and offer timely advice on how to enhance risk management of the company.
Appointing an external audit firm enhances the credibility of the business or the organization as the financial statements are checked thoroughly and then approved. The external auditor also informs various public and finance companies and also government authorities that this particular company is a reliable and trustworthy organization. The financial reports that are approved by an external auditor are deemed to be more credible and sound than those approved by any internal auditor.
An external auditor thoroughly reviews the financial reports of a business and then advices the company on how it can improve its financial health. They also recommend the expenditure requirements in various areas and provide strategies to enhance the business efficiency. External Audit firms in Dubai offer a team of expert and experienced auditors who can work out a reasonable solution to elevate the financial status and health of the company.
External auditors can restrict any inaccuracies or errors made while preparing the company’s accounts. Though most of the organizations think that an internal audit is enough for inspecting the company’s financial records, but this is not always true. There are chances that the internal auditor might have been with the organization for a long period and thus it can result in a subjective approach that could fail to amend certain errors that might have been made in accounting and bookkeeping records. On the other hand, the external auditors pursue to restrain any such errors while also investigating the reports which are made by the company’s internal auditor. They also offer advice and recommendations to the internal auditor on how to enhance the financial analysis and checks in the company.
The shareholders of a company invest their money and thus, require timely information about the financial health and performance of the firm. A shareholder’s key apprehension is that his money is secure in a venture that is profitable. By getting an external audit conducted in a company, it can provide transparency of financial status and stability to its shareholders and inform them if it’s a profitable entity or not.
By employing an external auditor for the business, the company will get various long-term benefits; for example, it offers an assurance to the management and also to the business owner or partners that the amended operations and various accounting controls that are put in place would make it a profitable business. This also attracts new investors to the company and enhance the public confidence towards your company.
EXTERNAL AUDIT OBLIGATIONS
- The external audit of the books is mandatory for most of the companies or business entities operating in the free zones. However, the branches of any local or foreign companies may not need a check in most of the free zones.
- All the company’s financial documents and books should be compulsorily maintained in an orderly manner.
- The UAE Commercial Companies Law mandates the businesses to preserve their financial records for at least a period of five years and also mentions that the audit of the mainland companies is mandatory.
- In some free zones, you do not need to submit the audited documents, but the preparation of the audit document is compulsory
- After the financial period ends, all companies get three to six months for completing their audit report and submitting it.
To summarize, the external audit process offers various advantages for a business and must be conducted every year by a reputed third party. We at IMC provide a wide array of audit services and can also assist you if you are looking to outsource finance and accounting services. Our expert and highly-qualified professionals can help you in all the verticals such as Auditing, Bookkeeping, Finance and Accountancy, Business Advice, and Financial Planning services. If you need any further details, please contact us, and we would be happy to help.