Six Reasons Why UAE Businesses Should not Avoid External Audits
Annual external audits are a hectic time for companies in the UAE, and business owners often find the audits a very tedious process. Many of them even raise the question ‘is audit important in the UAE’, since the country has no corporate tax. Small businesses in the mainland often skip the audit as submission of the audit report is not mandatory, and the same is the case with the companies operating under free zones in the Northern emirates.
However, audit firms in Dubai advise the companies to perform financial statement audits to prevent the organisation from the risk of fraud and other factors. Furthermore, banks and government agencies see the audit report as a testament to the company’s credibility and transparency. Apart from that, the following six factors are the top reasons why UAE businesses should not avoid external audits:
1. Audits Add Value to the Business
By conducting an annual audit in the UAE, the company can get a competitive edge by boosting the internal controls within the organisation. If a company is properly audited, then it is easy for the management to attract external stakeholders and investors. An audit assures that the financial statements of the company are free from any sort of material misstatement. By availing of the best external audit services in Dubai, companies can excel in better decision making, future growth, and promote good business practices.
2. Audit Helps to Bring in Investors
Investors look for credibility and transparency before deciding to invest in a new company. A properly audited financial statement speaks tons to the investors about the company’s credibility. It helps them evaluate the organisation’s financial position and inspire the investors to make strategic decisions. Furthermore, investors and government bodies give vital importance to the audit report information. Regular audits can increase the business rating of the company apart from attracting more customers.
3. Enable the Business Owners to Discover Errors
Business owners use an external audit to find out the errors in their accounting process. Errors inherent in the accounting process may prevent the entrepreneurs from making better decisions regarding the company’s operations. Errors also prohibit the management from reviewing the historical financial information and discover trends. Discovering trends is vital to the running of any business as it allows the entrepreneurs to gauge future production output or predict sales for the next months. An external audit also ensures that the accounting process within the company is in accordance with accepted standards such as IFRS.
4. Determines the Efficacy of Internal Controls
Availing external audit services in Dubai helps the companies to review the internal controls within the business. Such a review will enable the management to determine if proper approval and authority checks are there. Since the auditors are independent, they can provide an impartial criticism of the internal processes of the company. They can enable the business owners to identify the areas of operation that may benefit from more efficiency. A review of internal controls allows the management to discover areas that need to be streamlined and mitigate risks.
5. Makes the Companies Less Vulnerable to Fraud
Accounting processes need to be analysed by independent auditors in Dubai as they can extract any potential vulnerabilities such as fraud or embezzlement. A seasoned auditor will be able to assess the risk of fraud and develop systematic procedures to identify fraud indicators. An audit in this way enables the business owners to implement robust anti-fraud mechanisms within the organisation.
Since an auditor is not part of the company and doesn’t hold any interest in the organisation, it would be easier for him or her to identify financial misstatements that may lead to fraud. Not identifying the risk of fraud will lead to greater consequences, especially in a country like the UAE. The scandal involved with the Abu Dhabi-based NMC Health group of companies is the most recent example of accounting fraud in the UAE. After the scandal, one of the companies operated by the group was sold for One Dollar, which speaks of the magnitude of the consequences. The best audit firms in Dubai will assist the companies in preventing fraud within the organisation.
6. Enhances Legal Compliances
While operating in the UAE, a company has to take care of a set of legal compliance requirements such as Anti-money Laundering (AML), Value Added Tax (VAT), Economic Substance Regulation (ESR), Ultimate Beneficial Ownership (UBO) etc. By availing of the services of audit firms in Dubai, the business owners can assess whether or not they are complying with the compliance requirements.
Why Should You Hire the Best Audit Firms in Dubai, UAE?
External audits are critical to the decision making process of a company as it provides comfort for the management over the accuracy of books of accounts apart from detecting errors in the accounting system. External audits add value to the business, increase investor confidence, and make the companies less vulnerable to fraud. To achieve a robust external audit, companies should hire experienced audit firms in Dubai such as Jitendra Chartered Accountants (JCA).
Apart from helping the companies meet any mandatory obligations, availing of JCA’s audit services in Dubai is a proactive way to cut the risk and enhance the business strategy. JCA adopts a pragmatic, hands-on approach for the audit, which helps the entrepreneurs improve business performance. JCA’s highly qualified Chartered Accountants in Dubai helps business owners achieve their business goals by challenging assumptions and resolving issues that could be holding their business back.