Companies Need to Sort Out these Issues before Starting the Audit Process
In Dubai, an audit can be viewed both as a mandatory requirement for compliance as well as an optional process. For instance, audit report submission is mandatory for Dubai free zone companies but it’s voluntary for companies in the mainland. However, mainland companies in Dubai may require an audit when asked by lenders or investors. Whatever be the case, preparing well for an audit is necessary to obtain the desired result. Failing to resolve certain issues before an audit will put you in trouble when auditors in Dubai visit your office to kick off the external audit process.
In this article, we discuss some of the key issues you must resolve to ensure the audit process takes place smoothly. Also hiring experienced audit firms in Dubai will significantly help the smooth flow of the audit process. Read ahead to understand the key issues you must sort out before starting the process of external audit in Dubai:
Mediocre bookkeeping and lack of accounting expertise
Properly maintained accounts and financial records are critical for every business as the audit is carried out on the basis of the accounting records. Unfortunately, a good share of SMEs and startups follow mediocre accounting practices, which prevents the auditors from getting accurate information. In a bid to save costs, entrepreneurs may follow DIY (Do It Yourself) accounting practices, putting the organisation at stake.
Appointing inexperienced or unqualified accounting professionals also affects the quality of accounting & bookkeeping. Failing to resolve such issues at the earliest will be challenging for the audit process, putting auditors in Dubai in a tight spot. However, you can easily navigate such challenges by outsourcing the accounting requirements to experienced accounting firms.
Revenue ascertainment issues
Incomplete information and accounting records is a grave issue that companies face during an annual audit in Dubai. If such an issue remains unresolved, the audit report prepared by auditors in Dubai may fail to provide a clear picture of the company’s financials. Audit reports prepared in such challenging situations may be complex and vague.
However, audit firms in Dubai resolve such issues by carrying out a substantive test of the revenue received. The test to verify the audit report will be conducted by evaluating the sales invoices, etc. By carrying out a proper analytical procedure, auditors will be able to draw accurate conclusions and gather robust evidence to support their assertions.
Possibilities of fraud and malpractices
Fraud is one of the biggest risks a company must detect and sort out before the audit. If the management and the auditor turn a blind eye to the fraud, both of them will be held accountable for the after-effects of it.
Lack of proper inventory records
Companies usually have a lackadaisical approach when it comes to the assertion of the stocks. They consider the inventory assertion as costly and a disruption of the workflow. In such cases, audit firms in Dubai may fail to obtain accurate assertions regarding the records of inventory management and maintenance. However, audit firms will conduct test controls to ascertain the existence and condition of the stock held by the company.
Lack of an audit plan and improper execution
For mainland companies, submission of audit reports is not mandatory. However, mainland companies may opt for external audits to meet banking requirements or for investors. It means they won’t have a robust plan for audit as such companies prepare for an audit only when the need arises. Carrying out an audit without a proper plan may not yield significant results. Also, unplanned audits may disrupt the day-to-day activities of your company. You may also incur huge costs as you may not have set aside any money in the budget for the audit process. Companies must always keep in mind to prepare a proper plan before conducting an audit process.
Hire the Best Audit Firms in Dubai, UAE
During an audit, auditors in Dubai examine whether the company’s accounts are properly maintained as prepared as per local and international accounting standards. The objective of an audit is to provide an independent assurance that the company has presented a true and fair view of its financial performance in the financial statements. Hiring the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) can help companies achieve the key objective of the audit. JCA is one of the leading Audit firms in Dubai, UAE with over 20 years of commendable experience and reputation. Apart from providing accounting and audit services in Dubai, JCA offers compliance services related to VAT, Economic Substance Regulations (ESR), and Ultimate Beneficial Ownership (UBO).