Six Common Audit-Related Mistakes for Businesses Must Avoid
An external audit provides the best level of assurance for a company over its financial statements. Hiring experienced and qualified audit firms in Dubai is essential for the success of an annual audit. However, an audit may turn out to be a disaster if your company fails to meet certain critical requirements. Avoiding certain audit-related mistakes or deficiencies is vital for a successful audit. Read ahead to know what those mistakes are:
1. Lack of System Descriptions
Auditors need to document their client’s accounting process and you must help them to achieve this goal. If your organisation has thorough system descriptions, auditors can ensure that they understand the process by reading them. If your company lacks solid system descriptions, auditors in Dubai will be forced to interview people on the accounting team to clearly understand the process. It wastes the time of both the auditors and your management and staff.
2. Frequent Manual Workarounds
If your company has a large number of transactions that follow an identical process, the auditors will be happy as it can significantly minimise the amount of testing they need to do. However, the auditors will find it tough if the company has a lot of manual overrides, workarounds and exceptions. In such a situation, the auditors may require going through several of those transactions as well to make sure they don’t have adverse accounting effects.
Companies with handwritten bills and records make matters even worse for audit firms in Dubai. Even if your company uses a lot of paper, just make sure that you digitise all of them before the auditor knocks at your office door. Digitisation alone can help you uncover errors and fix them before they show up in the report.
3. Lack of Responsive Banking and Other Financial Relationships
The CFOs of your company should have strong relationships with their bankers, mortgage firms, credit issuers and other funding sources. It is essential to ensure that responses to an auditor’s requests for confirmation come quickly. CFOs or CEOs must notify bankers and other financial service providers a week or two ahead to anticipate requests for confirmations on loans, mortgages, bank accounts, lines of credit and other accounts from the auditor.
4. Lack of Adequate Preparation or No Preparation
Companies facing the first-time audits often appear inadequately prepared when auditors visit their office to conduct the audit. Incomplete financial statements, transactions that are not supported by documentation and missing documentation tell the auditors that the company is not properly prepared for the audit. Audit firms in Dubai recommend you ensure all standard financial statements and transaction documents are easily available to expedite the process.
You must also facilitate access to payroll, assets, and inventory to make the job of auditors smooth. The process will be easier for auditors in Dubai if you organise foundational documents, such as articles of incorporation and long-term lease and other legal agreements, and everything document the auditors directly request for the audit engagement. More importantly, if auditors ask for specific information, be ready with it.
5. Using Subpar Accounting Software
The usage of cheap or free software can be a nightmare for auditors as it makes things more complex. Apart from making the process tougher, subpar software may create security and compliance issues. Audit firms in Dubai recommend you install accounting software that has built-in audit-trail functionality. Accounting software with robust transaction-tracking capability can gel the auditors to easily verify the accuracy of your numbers. Good accounting software minimises the work involved in an external audit.
In the age of digital transformation, the use of cloud-based software makes it easier for auditors to dig into financial statements to underlying ledgers, reports, reconciliations and original transactions. Accounting software with modern features enables auditors to get what they need without requiring your employees to dig up the required information for them. Consult with the best audit firms in Dubai to select good accounting software.
6. No Proper Segregation of Duties
Segregation of duties is the most critical part of internal controls for any business. Here, auditors look for the likelihood that the numbers are manipulated. If the same team member is handling key jobs from receiving payments to paying company bills, the numbers have inadequate controls. It means the workload of auditors increases. In short, no segregation of duties increases the chances of fraud.
Hire the Best Audit Firms in Dubai for a Smooth Audit Process
Audits can turn out to be a nightmare for both auditors and other clients if the management commits the mistakes listed in this article. The best way to avoid audit-related mistakes is to understand the process in detail by asking relevant questions during the audit engagement. You should also properly answer the questions posed by the auditors in Dubai. More importantly, hire the best audit firms in Dubai such as Jitendra Chartered Accountants (JCA) to avoid an audit failure. JCA is one of the leading audit firms in the UAE with over 20 years of experience. We have served clients from a wide range of industries and have clients of exemplary reputation. Hire our qualified auditors to have a peaceful annual audit.