Business Health Checks: Are you Ready for Annual Audit in the UAE?

Every annual audit season in the UAE is generally a time of anxiety and stress for entrepreneurs and their in-house accountants. There is no need to panic when auditors in Dubai arrive at your office; just consider the audit process as a routine business health check-up. A health-conscious person regularly undertakes routine health check-ups while others approach a doctor only when some serious disease knocks them out.

As an entrepreneur, you must think of an audit as a health check-up that sheds light on the weaknesses or any potential anomalies in your financial statements. Just like a doctor, the UAE auditors will diagnose your financial statement to ensure that it is in compliance with local and international accounting standards such as the IFRS. Coming fresh out of a year plagued by COVID-19, this audit season will be challenging for small businesses, but it all depends upon how ready you are for the annual audit.

No need to worry; audit firms in Dubai can help you tackle this challenge with some key insights provided in this article. Adhere to the following steps to ensure that you are ready for the annual audit,

Entrust an Employee with Responsibility of Audit

Before the auditors in Dubai land at your office, you must engage a dedicated employee of your organization to oversee the process. The particular person should be having some knowledge about the audit process, accounting standards and financial information of the company. He or she should contact the audit firm well in advance to learn about the responsibilities of the management and the auditor.

Review the Engagement Letter

Before the commencement of the audit, many audit firms in Dubai will send an audit engagement letter to clients to avoid any misunderstandings during the audit process. The letter documents and confirms the auditor’s acceptance of the appointment, objective & scope of the audit and the extent of the auditor’s responsibilities. As a business owner or manager of the company, you should review the engagement letter carefully and raise questions if any aspect of the letter remains vague or unclear. Asking questions will help you understand how the audit firm in Dubai plans to execute the engagement.

Document Internal Systems & Controls

Every auditor would desire to have a properly documented system in their client’s organization that would let them have a better understanding of the company. This understanding would make the audit process faster and smoother. You should take the initiative to update documentation which would help your organization analyse the way transactions are processed and controlled.

You can commence the documentation of systems by reviewing the transactions of the company’s processes. The systems that usually require documentation include sales, accounts receivable (including write-offs), cash receipts, purchasing, receiving, accounts payable, contracts and payroll.

Get Accounting Records in Order

Most small businesses don’t have a full-fledged accounting department, and they must be operating with a single in-house accounting professional. This is in contrast to the big companies that function with an accounting department headed by a finance chief. In the case of small businesses, it becomes imperative to prepare well in advance for the audit by collecting all the relevant documents.

All the relevant accounting records must be reconciled and analysed. You should determine that account balances are properly stated and must critically analyse what is included in the balance. You will be asked to show copies of agreements that document the company’s operations and obligations, such as current loan and lease agreements, contracts, purchase and sale commitment documents, minutes of board meetings and correspondence related to any litigation.

Prepare Employees to Be Honest with Auditor

Frauds are a threat to the credibility of the entire financial system, and therefore the auditors always assess the risk of fraud in your organization. As part of assessing the fraud risk, the auditor will raise some serious questions to the employees, who are a part of various aspects of your company. As a part of the management, you should instruct the employees to be honest and straightforward while communicating with the auditors in Dubai.

Auditors will ask the employees to provide a wide range of company background information, including organization charts, job descriptions, employee names, telephone numbers and e-mail addresses. This necessitates an urgent need to prepare well in advance for an annual audit in the UAE. Consult with the best audit firms in Dubai to ensure you will have a hassle-free external audit.

Some Questions an Auditor May Ask During Audit

While auditors in Dubai commence the external audit process, you must be ready to answer certain typical questions they usually ask. The following are some of them,

  1. Comments and recommendations are given by the auditor the previous year.
  2. Any major change in the company’s operation in the current year.
  3. Questions about areas that warrant special consideration due to high risks.
  4. Questions about significant transactions that may impact the financial statement.
  5. Any other changes in the company that may influence the final audit report.

How Can Jitendra Chartered Accountants Help?

There are no shortcuts to alleviate the pressures of an annual audit except being proactive and fully prepared. Being ready for an external audit doesn’t take much effort if your accounting records are proper and well-organized. Also, you need to train your employees to give honest replies to the questions asked by auditors in Dubai during an external audit process.

Consulting with the best audit firms in Dubai, such as Jitendra Chartered Accountants (JCA), will make the process easier for you as we come with more than twenty years of experience in the industry. 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 investors achieve their business goals by challenging assumptions and resolving issues that could be holding their business back.

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