At the end of an external audit, auditors in Dubai issue an audit report containing their opinion on whether the company’s financial statements comply with local and international standards and are free from material misstatement. The auditor’s report is critical for businesses as banks and investors rely upon the audited financial statements before lending to or investing in a company. Some free zones in Dubai also demand the submission of audited financial statements to renew the trade license of companies.
Considering the compelling significance of the audit report issued by audit firms in Dubai, it will be worthwhile for entrepreneurs to have a general understanding of the components of an unqualified report. An unqualified opinion or report doesn’t contain any adverse comment and doesn’t include any disclaimers about any clauses of the audit report. Read ahead to know the seven parts of a standard unqualified audit report:
1. Audit Report Title
The title of the audit report should include the date of the audit and the addressee of the report. The date is usually the accountant’s last day of fieldwork. The addressee of the audit report usually will be the individual, group, entity, board of directors, and/or stockholders of the organization who availed of the audit services in Dubai. The word ‘Independent’ will be included in the report to make it distinct from the internal audits carried out within the organisation. For example, audit firms in Dubai may write a title like “Independent Auditor’s Report” or “Report of Independent Auditor.”
2. Opening or Introductory Paragraph
The introductory paragraph of an audit report is usually a statement that the financial statements described in the report have been audited. It also identifies the financial documents used to carry out the audit and states the caveat that the company’s management team is responsible for the accuracy of the financial statements. This paragraph also determines the time frame covered by the audit.
3. The Scope Paragraph
The scope paragraph of the auditor’s report states what is involved in the audit, which means the standards, rules and methods followed. Audit firms in Dubai generally follow the International Financial Reporting Standards (IFRS) for the audit of companies. This paragraph also states that the audit provides only reasonable assurance that the financial statements contain no material misstatements. It will also state that the audit involves an examination of the evidence on a test basis.
4. Opinion Paragraph
The opinion paragraph is the most critical component in an auditor’s report as it states the impression derived by auditors in Dubai after auditing the financial statements. In this paragraph, the auditors state that they are independent of the company in accordance with the Code of Ethics for Professional Accountants as per the International Ethics Standard Board for Accountants (IESBA) which is relevant to an audit of financial statements in the UAE. The auditors will also state that they have fulfilled their ethical responsibilities as per the IESBA code.
The auditors in Dubai have to state that the management of the company is responsible for the preparation and fair representation of financial statements as per the International Financial Reporting Standards and the company’s Articles of Association (AoA) in line with relevant provisions of the UAE Federal Law No (2) of 2015 or the laws of the freeznoe. The management’s responsibilities include designing, implementing and maintaining internal control relevant to the preparation and fair representation of financial statements that are free from material misstatement; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in circumstances.
5. Description of Auditor’s Responsibilities for Audit of Financial Statement
The auditor ascertains his objective of obtaining reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes the auditor’s opinion. As part of an audit in accordance with International Standards on Auditing (ISA), the auditor exercises professional judgment and maintains professional scepticism throughout the audit. The auditor also:
- Identifies and assesses the risks of material misstatement of the entity’s (or where relevant, the consolidated) financial statements
- Obtains an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances
- Evaluates the appropriateness of accounting policies used
- Concludes on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained
- Evaluates the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation (i.e gives a true and fair view)
- Where the auditor is required to report on consolidated financial statements, and obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. The group auditor is responsible for the direction, supervision and performance of the group audit. The group auditor remains solely responsible for the audit opinion
6. Report on Other Legal & Regulatory Requirements
The UAE auditors, in accordance with the UAE Federal Law No (2) of 2015, will report the following in this section of the audit report:
- Obtained all the information considered necessary for the purpose of the audit
- The financial statements have been prepared to comply in all material respects with relevant provisions of the UAE Federal Law No (2) of 2015
- The company has maintained proper books of accounts
- The financial information in the director’s report is consistent with the company’s books of accounts
- The company has not purchased or invested in shares during the relevant financial year
- Based on the available information the company, in the relevant financial year, has not contravened any of the relevant provisions of the UAE Federal Law No (2) of 2015 or of its Memorandum of Association (MoA) or AoA that would materially affect its activities or financial position as of the particular financial year ending period
7. Auditor’s Name & Signature
In this section, the auditor identifies himself as the author of the report by printing his name at the end. If the auditor works for specific audit firms in Dubai, he will state the name of the company or the certified accountant he works for. The auditor acknowledges his accountability by putting his signature below his name in the audit report.
Carry out your Audits through the Best Audit Firms in Dubai
The audit report is critical for your business success as banks, investors and government authorities rely upon it. However, you need to hire the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) to have a stress-free audit. JCA is one of the best providers of audit services in Dubai with more than 20 years of experience.
Our audit experience covers a wide range of industries, which is bound to have a positive result on your company’s external audit. JCA also have a number of reputed clients who can testify to the quality of our audit process. We also offer services related to VAT, corporate tax, accounting, Economic Substance Regulations (ESR), Anti-Money Laundering (AML) and Ultimate Beneficial Ownership (UBO). Connect with us today to have a peaceful audit process.