01 September 2023
Every organisation depends on the integrity and accuracy of its financial records to run effectively and profitably. Companies can verify that their financial activities are being accurately documented and recorded in one specific way, which is through auditing. This method determines if the company is operating profitably or not. The process of auditing is crucial for the business, the investors, the government, the creditors, the shareholders, etc. They heavily rely on the audit findings when making crucial business decisions.
An audit is a review of a company's financial accounts. Audits are carried out to give stakeholders, including investors, the assurance that a company's financial reporting is correct. Additionally, audits give authorities the assurance that a business is abiding by the necessary legal and regulatory requirements. A financial investigation where a company's financial statements are examined by an external or internal auditor to verify they are accurate and error-free is a common way to conceptualise an audit. Following an audit, the auditor will express an opinion regarding whether the financial statements fairly reflect the company's financial situation.
Businesses must appropriately organise their records in accordance with recognised standards prior to an audit procedure. Typically, auditors will create an audit report based on the guidelines set forth by the government for the recording of accounting entries. An auditor will need financial statements, a trial balance, a general ledger, a report on the filing of VAT returns, and legal paperwork for this.
The following are the documents to be submitted for an audit of a company.
It is crucial for a business to guarantee that the payroll records are correct and created in accordance with the rules. The auditor uses the payroll report to verify the wage expense. An auditor can confirm whether or not all currently employed individuals are getting paid at the correct rates in accordance with their employment agreements. The auditor can provide recommendations after examining the payroll reports to determine the organization's existing position.
The auditor must be given a list of all the company's bank accounts as well as the required paperwork for each account. The auditor's job would be significantly simplified as a result of not having to collect the required papers while conducting the audit.
Analysing the bank statements is the simplest technique to comprehend the flow of money into and out of the business. As a result, the bank's confirmation of the balances listed in the bank statement is required by the auditors along with the bank statement for the audited period and the balances from the prior year. To confirm the balances listed in the statement and the financial records, the auditors might email the bank directly for this purpose. The business could have both domestic and foreign bank accounts at any given moment.
During the audit process, all relevant documents pertaining to the company's establishment must be easily accessible. Your checklist as you begin preparing for the audit should include the company bylaws, the articles of association, and the memorandum of association (MoA). You would have to provide information, such as the quantity of authorised, issued, or pending shares. You could disclose some of this information to the auditor with the aid of the articles of incorporation. The auditor should also be informed of any crucial information contained in the bylaws. Your trade licence, tax registration number (TRN), share certificates and certificate of incorporation must all be provided to the auditor. The Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR), which are required by Cabinet Resolution No. (58) of 2020, as well as a copy of the Economic Substance Notification and Report (if applicable), will also be requested by the auditors.
The fixed asset registry and the fixed asset depreciation calculations will be checked by the auditor. The auditor will organise for the stock count and asset verification, including that of equipment and machinery, in order to verify fixed assets. Loans, leases, and any other significant contracts that the business has with banks or other businesses must be disclosed in the financial records for the public to comprehend the liabilities. The auditor must have easy access to all loan, lease, and fixed deposit documents upon request.
A general ledger is a crucial record in accounting and bookkeeping that provides information on all the transactions your business has made over a certain period of time. The auditor can clearly understand the level of activities they are required to audit by examining the General Ledger. Since the trial balance is the source of all the figures in your company's financial statements, auditors usually like checking it. The accounting programme also generates the trial balance. Since it is simple for them to transfer the trial balance directly into the trial balance section of their software, some auditors might prefer to get it in Excel. It all relies on the auditor you are working with and their working methodology. To prepare for the audit, check with your favourite audit companies in Dubai.
The minutes of each board of directors meeting will be examined by the auditor throughout the audit. The required financial statements are described in the minutes, and companies that participate in similar operations are now required to comply with the Economic Substance Regulations.
At the conclusion of each tax period, each VAT registrant is required to submit a VAT Return to the Federal Tax Authority (FTA). You must be organised in regards to the papers because an auditor will review your VAT Return filings and will also compare the earnings with the submitted VAT Returns.
In order to understand the journal entries made and the management's decisions made during the preparation of the financial records, the auditor may have many questions. For example, the balance sheet has many receivable and payable balances that call for balance verification from the parties. As a result, the auditor requests balance confirmation documents that have been signed and stamped by the connected parties. If there are any discrepancies, the auditor will explain them in the audit report and include remarks. Also, the company that is being audited must list every transaction completed within the predetermined time period and give all related invoices and bills. An auditor will need the invoices to determine the company's total spending for the period and determine whether the amount matches that in the books of accounts.
Every business will have debts of some sort, some of which will be bad debts. To verify all of the debts with the creditors, an auditor confirms the loan statements. Providing the auditor with your company's most recent loan statement makes the confirmation process go more smoothly.
Annual audits take a lot of time for businesses to complete, but they are essential to ensuring that accounting regulations are adhered to strictly. Auditors in UAE verify that the financial status of the company is accurately reflected in the financial statements and other required documents by carefully examining them.