Preparing for Audit: Companies must Diligently Tackle these Challenges
Business owners, especially those who run SMEs or start-ups, plunge into immense pressure when the time for audits in the UAE approaches. Unnecessary fear for audits is a common scenario across the UAE, which usually stem from a lack of preparation or inadequate knowledge about the process. Audit firms in Dubai think that understanding how to navigate the common audit challenges can help the entrepreneurs beat the stress out of them. Here is a list of some of the common audit challenges that business owners need to tackle diligently. Read ahead:
Enlisting Approved Auditors in Dubai
Companies operating in Dubai free zones are mandatorily required to get the books of accounts audited annually and submit them to the relevant free zone authorities. Submitting the audited financial statements is mandatory for companies operating in Dubai free zones to get their trade license renewed. In some Dubai free zones, the annual audit should be done by approved audit firms in Dubai. Understanding these requirements and navigating them with finesse could be challenging for many companies.
Companies may ignore the requirement of submitting the audit reports, leading to penalties or revocation of trade licenses. Some companies may perform external audits through audit firms in Dubai that are not approved by the free zone authorities. To overcome such a challenge, the business owners should check the list of approved auditors in Dubai that the respective free zones maintain and update periodically.
The Challenge of Bogus Auditors in Dubai Mainland
Even though it is mandatory to maintain the books of accounts, conducting annual audits is voluntary for Dubai mainland companies. Small businesses and start-ups in the mainland approach audit firms in Dubai only if they want a loan or a potential investor has requested the audited financial statements. To minimise the costs and also to get a quick &favourable report, the business owners may approach unqualified auditors. This may land them in trouble with the authorities. Hiring the best audit firms in Dubai is the best solution to tackle these challenges.
Bookkeeping and Accounting Expertise
Maintaining the books of accounts in the UAE is mandatory as per the Commercial Companies Law as well as the UAE VAT Law. Auditors in Dubai, during the audit process, meticulously examines the financial records and accounts. Trouble creeps in if the company’s accounting system or bookkeeping practices are poor. Accounting records riddled with errors cause enough trouble during an audit. Errors may occur due to the inefficiency of the accountant, ignorance of the management or fraudulent employees.
The auditors need to ensure that the books of accounts are prepared by both local and international standards such as the IFRS. Maintaining the books of accounts in Dubai without errors and by acceptable standards may be challenging for SMEs. What they should do is to outsource their accounting function to accounting & bookkeeping firms in Dubai.
Challenge of Building Strong Controls
A favourable audit report finding is what you need as it would help you win shareholders’ trust and to enhance the company’s image before lenders, free zone authorities and the government. Business owners can obtain an audit report with minimal findings only if they have implemented strong internal controls, systems and processes. SMEs often fail to check the efficiency of their internal controls, and they won’t have any system to detect the presence of fraud. This is a huge challenge for small businesses with few resources. Conducting internal audits in Dubai before an external audit is essential to assess the efficiency of internal controls, systems and procedures. This would help minimise the troubles.
Big companies often have an in-house team that performs internal audits periodically. SMEs, however, can outsource the requirement to internal audit firms in Dubai that can assess the efficiency of the company’s internal controls at affordable prices. Conducting internal audits will give the management the confidence to face the external auditors in Dubai without fear and it is necessary to obtain a favourable audit report.
Challenges of Audit Plan and Execution
Now, this is a great challenge that you must deal with effectively with the help of your auditors, employees and the company board. The auditors will issue an audit engagement letter that details the schedule, plan, scope of the agreement and the cost of audits in Dubai. The audit should be conducted without disrupting the day-to-day operations of your company, and the timing must be determined by discussing with the auditors. A prolonged audit would give out wrong signals about your company. Usually, an audit will take longer if there’s some inconsistency in the company’s financial records. Pre-plan the audit to successfully tackle this challenge.
Jitendra Chartered Accountants Simplifies Audit Process for you
Conducting external audits in Dubai come with big challenges for small businesses and start-ups as they are usually unaware of the nuances of the process. A great deal of preparation and brainstorming must be done before conducting the audit, especially while choosing the best audit firms in Dubai. Some free zones have a list of approved auditors in Dubai, UAE, and you can choose only from the list. These are some of the audit challenges that entrepreneurs must diligently tackle.
However, choosing experienced auditors in Dubai, such as Jitendra Chartered Accountants (JCA), will help you to wind up the audit process as per the schedule and within the budget. We have experience in auditing the financial statements of companies from a wide range of sectors such as manufacturing, logistics, retail, e-commerce, e-gaming, and other industries. JCA is one of the few Chartered Accountant firms in Dubai, UAE, with more than 20 years of service. Our audit services in Dubai will enable your company to build a good reputation among the banks, the government, free zone authorities, shareholders and potential investors.