What Are The Major Objectives Of An External Audit
Not long-ago businesses in Dubai were free to get the bank facilities without being their books of accounts audited. However, things changed in the 1990s when many investors went burst and left the country leaving behind the market and banks to scream of losses. New regulations for auditors/audit firms in the UAE were introduced in 1995 leading to an enhanced regime of transparency in the country.
Post the regulations, the importance of audit firms in Dubai, UAE increased as free zones made it mandatory for license renewal. Further, the mainland companies also started performing audits as banks request audited books of accounts for due diligence purposes. The shareholders and investors also rely upon audited financial statements to make informed decisions about businesses.
The core objective of an audit is to determine whether an organisation is providing a true and fair view of its financial performance and position. Auditors in the UAE provide assurance to the management over the accuracy of accounts and reveal systematic errors that may occur throughout the year. Apart from these, the following are the major objectives of external audits:
Enhance Degree of Confidence in Financial Statements
The core objective of an audit is to enhance the degree of confidence of intended users (shareholders, investors and other stakeholders) in the financial statements. To achieve this objective, the auditors express their opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. An audit conducted in accordance with applicable reporting frameworks such as IFRS and relevant ethical requirements enables the auditor to form a true and fair opinion.
Obtain Reasonable Assurance on Financial Statements
External auditors are required to obtain a reasonable assurance whether or not the financial statements are free from material misstatement as a whole. The material misstatement could stem either from fraud or error. Reasonable assurance is a high level of assurance that is obtained when the auditor manages to gather adequate and appropriate audit evidence to reduce audit risk. Audit risk is the risk of expressing an inappropriate opinion when the financial statements are materially misstated to an acceptably low level.
Verify Efficiency of Internal Controls
The focus of auditors doesn’t merely fall on the numbers, but they try to gain an understanding of overall systems and internal controls in an organisation. As a result, the external auditors will be able to identify deficiencies in the accounting systems or controls for which they will make recommendations. This will make the organisation more efficient and less prone to fraud or error. Hiring the best audit firms in Dubai is the best way to ensure this vital objective is achieved.
Audited Financial Statements Vital for Business Credibility
Businesses that get their financial statements audited by an external auditor have more chances at boosting their credibility in the market as opposed to the firms that said no to an audit.
Should you be seeking to raise finance or sell your business in the future, providing audited accounts gives security that your accounts are free from material error or malpractice, making you more likely to be successful in achieving your goals.
Adds Transparency to the Business
Most businesses are run by a board of directors on behalf of the shareholders who may not have too much involvement in the day-to-day operations. In many cases, the directors will be outside the UAE and will be physically present in the UAE only when necessary. An independent audit of the financial statements can provide transparency to the shareholders that the company is being run within their best interests and can highlight any issues that have occurred which may not have been brought to their attention.
How can Jitendra Chartered Accountants Help you?
External audits are critical to the decision-making process of a company as it provides comfort for the management over the accuracy of books of accounts apart from detecting errors in the accounting system. External audits add value to the business, increase investor confidence, and make the companies less vulnerable to fraud. To achieve a robust external audit, companies should hire experienced audit firms in Dubai such as Jitendra Chartered Accountants (JCA).
Apart from helping the companies meet any mandatory obligations, availing of JCA’s audit services in Dubai is a proactive way to cut the risk and enhance the business strategy. JCA adopts a pragmatic, hands-on approach for the audit, which helps the entrepreneurs improve business performance. JCA’s highly qualified Chartered Accountants in Dubai helps business owners achieve their business goals by challenging assumptions and resolving issues that could be holding their business back.