Learn about the Different Types of Audits in Dubai, UAE
As an entrepreneur in Dubai, getting accounts audited every year is important for you as it ensures that your company’s records are in order and reliable. During an audit, auditors in Dubai scrutinise a company’s internal controls, existing systems and financial statements. There are different types of audits; some of them are conducted by the internal party and some others are by external audit firms in Dubai. Other types of audits such as tax audits are conducted by the Federal Tax Authority (FTA).
Normally, an auditor examines your company’s financial records and transactions to check whether they are accurate. In short, audits help ensure your business is operating smoothly and in compliance with the existing regulations. Here is a list of major types of audits that you should be aware of:
Companies conduct an internal audit to identify any weakness in internal controls, operational efficiency or regulatory compliance. Internal audits can be conducted by personnel from within the organisation, but businesses often entrust the best internal audit firms in Dubai to carry out the process. An internal audit ensures that the company is on the right track by improving risk management & following international & local standards. Business owners conduct an internal audit for reasons including, but not limited to, monitor the effectiveness of the system, identifying areas that need improvements, make sure the business is compliant with laws and regulations, review and verify financial information, evaluate risk management policies and procedures and scrutinise operation processes.
An external audit is an independent assessment of a company’s financial statements which provides reassurance to the stakeholders that the company’s financial records are free from material misstatement. During an external audit, auditors in Dubai review transactions, procedures, and balances, and even in some of the items of the financial statements the auditor asks for independent confirmation like from bank, customers, suppliers etc. At the end of the audit, the UAE audit firms submit an audit report. Lenders, creditors, shareholders and investors rely upon the audit opinion to gain knowledge about a company’s financial health. Most free zones in Dubai has made it mandatory for companies to submit the annual audit report. Meanwhile, the companies in the Mainland go for voluntary audit.
Forensic audit or fraud investigation has become increasingly relevant at a time when corporate fraud is on the rise. Audit firms in Dubai that conduct a forensic audit track & investigate the matters related to fraud, financial crimes & commercial disputes. Even, to file a case the Police in UAE asks for the auditor’s certificate. The audit also determines the root & causes of financial errors, alleged employee fraud, reduction in company revenue, increase in cost & other operational matters.
Forensic audits encompass a wide spectrum of investigative activities such as an audit to prosecute a party for fraud, embezzlement or other financial crimes. Apart from financial fraud, a forensic audit may also include activities such as bankruptcy filing disputes, closures of businesses etc. A forensic audit is carried out when there is a possibility for the evidence gathered to be used in court.
Audit of Sales
Retail businesses that operate in shopping malls in UAE are mandatorily required to submit a Statement of Gross Turnover that is being audited by an approved auditor. This requirement is based on the terms in the Lease Agreement. The definition of gross turnover will be as specified in the lease agreement which provides for certain components of sales to be included/excluded respectively. Conducting an audit of sales helps to review the sales collection process to potentially identify control deficiency and ensures the tenant’s compliance to the lease agreement. It also provides assurance of reported gross sales to the landlord.
As per the Tax Procedures Law (Federal Decree-Law no. 7), a tax audit is a process carried out by the Federal Tax Authority (FTA) to examine the commercial records or any information or data of the taxable persons conducting a business in the UAE. The FTA carries out the tax audit on a taxable person to ensure that the taxable person is complying with the provisions of the UAE VAT Law as well as the Tax Procedures Law.
By conducting a tax audit, the FTA ensures that the taxable person has paid all the liability and every tax due is collected and provided to the government within the given time-frame and even whether the taxpayer is compliant with the complete law or not like issuing proper Tax Invoice, eligible VAT credit based on a proper Tax Invoice from a supplier, etc. Tax agents in the UAE who are registered with the Federal Tax Authority assist the companies with pre-audit and post-audit support to ensure VAT compliance. The companies should not approach the tax agents who are not registered with the FTA.
How Can Jitendra Chartered Accountants Help you?
Business owners must conduct audits regularly to understand different aspects of your business including the weaknesses of internal controls or the financial health of the company. Audits can help you catch issues early on before they snowball into big mistakes. If you don’t conduct audits, you may find yourself reviewing inaccurate information in the financial records, which can impact your business later. However, the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) can help your business grow by conducting internal audits, external audits, forensic audits and audit of sales.
JCA can also help you with VAT compliance to prepare you in case you are faced with tax audits in the UAE, as JCA is a registered Tax Agency and registered Tax Agent with FTA. Through the audit process, JCA helps you identify the risk involved in the business operation with regards to the industry and the market. We examine the financial process and strategy to enhance the performance and regulatory compliance of companies in Dubai & UAE.