Key Insights About Audit Engagement in the UAE
Much has been written about the process of audit and the many stages of the audit process. However, along with the audit process, the audit engagement also deserves attention, as it is a term that mainly refers to the contractual agreement between the auditors in Dubai and the clients. Audit engagement doesn’t refer to the entire set of audit tasks that the Dubai auditors are set out to perform but it is an arrangement that the auditor has with the client to audit the latter’s accounting records and financial statements.
All audit engagements may not be the same in scope and substance but some common traits can be found in aspects including the preparation, planning, field testing & audit procedures, and rendering the audit opinion. Professionals and business owners,
The pre-audit engagement, as the name suggests, takes place before the actual audit engagement. In this stage, the audit firms in Dubai ponders over whether or not to accept the client or whether to continue to perform the audit on his behalf. There are many reasons for a Dubai audit firm to decide not to continue with the client. The client may have changed the business to a high-risk sector or has been involved in unethical business practices. In such cases, the UAE audit firms may not renew the annual audit engagement with the client.
If the audit firm accepts the engagement, it will discuss with the client the key aspects of audit engagement such as the timetable of fieldwork, the scope, and duration of the audit, and the expected delivery date of the audit opinion. All these aspects and the fee structure will be detailed in an audit engagement letter.
What Should an Audit Engagement Letter Contain?
The audit engagement letter serves as the contract for the professional services offered by the audit firms in Dubai. Dubai audit firms usually include the following details in the audit engagement letter:
- Purpose of the audit engagement
- Scope of the engagement (specifics about what Dubai auditor would and won’t do)
- Responsibilities of client and instructions
- Known adverse conditions or circumstances
- Reliance on facts that the clients provide the auditors in Dubai
- Billing rate and estimates
- Request for client’s signature
- Instruction to sign and return the audit engagement letter
Apart from these, the audit firms in Dubai may also include warnings about inadequate internal control, limitations on the distribution of financial statements, arbitration clauses, and record retention policy.
Checklist for Audit Engagement from Dubai Audit Firms
The best audit firms in Dubai usually takes a systematic approach during the audit engagement. The Dubai auditors carry out a holistic review, research, and audit for which they undertake the following steps:
1. Engagement Planning
The audit engagement plan kicks off with the creation of a strategy for how to execute the audit process. The clarity of the audit objective determines how to move on with the audit engagement planning. At this stage, the Dubai audit firms set the parameters and scope of the audit and a risk assessment of the organization or even the industry will be conducted.
2. Field Work
The fieldwork is done based on the engagement planning. The auditors in Dubai at this stage will follow a set of procedures to obtain evidence for the effectiveness of internal controls. These may include analytical procedures, statistical analysis, independent balance verifications of deposits and obligations, review of physical and information security procedures, and observation of operations and transactions etc. Social distancing is mandatory in Dubai after the COVID-19 pandemic and many audit firms in Dubai avoid the face to face interviews.
3. Gathering Evidence
While gathering the evidence, the auditors in Dubai focus on the objectives of the audit engagement. Traditionally the gathering of evidence includes the physical observation and staff interviews. However, Dubai auditors may use telephone interviews if the personnel are located outside the country or dispersed around the globe. Gathering evidence has become challenging in the wake of the COVID-19 pandemic and innovative ways are suggested by many Accounting bodies to undertake the process effectively.
4. Report the Findings
After successfully finishing the fieldwork and gathering evidence for the effectiveness of the client’s internal controls, the auditors in Dubai reports their findings with ample supporting documents. Depending on the level of quality of the financial reporting, Dubai auditors may issue a report that may sometimes be adverse to a client’s interests. However, even though it may appear as an unlikely conclusion to the audit engagement, the independent audit becomes valuable only if it is delivered with professional discretion. Also, it is to be remembered that all reports are not conflicting with the interests of the client.
Advice from the Best Audit Firms in Dubai
When a company undergoes the audit process, the auditors in Dubai may use the term audit engagement. It is important for the audit firms in Dubai to clarify to the clients the meaning and scope of the term. In general, the audit engagement signifies the contractual agreement between the audit firms in Dubai and the client. Every audit firm follows certain procedures for the engagement and it is recommended that the businesses choose the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) to perform their annual audits.
Jitendra Chartered Accountants (JCA) has a team of the best auditors in Dubai, UAE with commendable experience in helping out plenty of companies with their auditing requirements. JCA’s highly qualified Chartered Accountants will ensure that the company’s financial statements comply with local and international regulations. JCA is a one-stop solution for all the services including accounting, auditing, and VAT-related services. JCA is committed to providing high-end business advice to the clients thereby helping them set robust business goals.