Auditors are known as gatekeepers to the standing of a company and for good reason. They help shareholders and other company parties in making crucial financial decisions while also adhering to corporate governance. Federal Law No 2 of 2015 of Commercial Companies Law assists in explicating the process of auditing in the UAE.
Article 27 of the Commercial Companies Law or Company Law, obligates every joint-stock company and Limited Liability Company (LLC) to appoint one or more UAE auditors to audit the accounts every fiscal year. It also allows other types of companies such as sole proprietorships to appoint an auditor as per the law provisions.
The type of companies determined under the law should prepare financial accounts yearly and need to follow the International Accounting Standards and Practice while creating or preparing the report, thereby giving a clear overview of the profits and losses of the company.
Every audit, no matter what kind requires dedication, coordination and substantial resources. Our blog covers everything you need to know about achieving a successful annual audit. Let’s get started!
Your organization can take various measures to ensure a successful, smooth and effective audit.
The Best practices to successfully achieve an annual audit are as follows:
1. Auditing is a Team Effort
It is crucial to keep in mind that a little pressure can be expected if it is your first time undergoing an audit in UAE since auditors are occupied during audit season, given the partaking of audits for other companies on the same days.
Furthermore, time constraints aren’t the only issue, auditors also have to deal with monetary restrictions. Taking time to aid auditors with all the information they need will be beneficial for both of you and will make way for a smooth operational audit process.
2. Give the ‘PBCs’ Required by Auditors
In auditing, there exists a term PBC, which means “Provided by the Client”. The audit firm you hire will set a timeframe and request a list of information they would need. Remember, this information needs to be given as quickly as possible.
Also, the information needs to be provided accurately and not just for the sake of it, as this will cause issues later on. To know exactly what to provide the auditor, it’s always best to communicate with the audit business you hired in Dubai.
To understand the circumstances better, get in touch with the audit company you hired in Dubai. When you give auditors incomplete or confusing PBCs, they have a hard time detecting an error during the audit process, leading to inaccurate auditing.
3. Keep Key Documents Ready
Keep key documents ready to give auditors for preparation of the annual audit report:
- Payroll Records
- List of all bank accounts
- Legal documents such as Memorandum of Association (MoA), Article of Association (AoA), Number of shares, Trade license, Tax Registration Number (TRN), and share and incorporation certificates. Real Beneficiary Register (RBR) or Partners or Shareholder Register (PSR)
- Minutes Meetings
- List of all Transactions
- General Ledger
- Trial Balance
- Copies of Leases, Loans, Contracts
- Current Loan Statement
- VAT Return Filings
- AML Program Manual
4. In the Case of Detection of Errors in Auditing, Assist the Auditors
When an auditor carries out testing he may go through detection of errors in auditing, or several inconsistencies. In such a situation, try to determine what the auditors were testing for as this could be an unintentional blunder on your part. There is a high probability that the data you gave wasn’t what they were looking for or they have incomplete data.
In such a case, clarification and communication are key. You can either provide them with new data or be straightforward and honest by letting them know that you don’t have the needed data. This is a common occurrence seen with a lot of small businesses during their first audit or when they hire a new audit firm in Dubai, so there is nothing to be afraid about. Alternate testing is a possibility only if the data missing is due to a rational cause.
5. Other Quick Fixes for a Smooth Audit
Apart from the essential practices mentioned above, you can refer to the below points to increase your chances of a successful annual audit. They are as follows:
- Define deadlines and needs and connect with your in-house accounting staff and auditors in Dubai.
- Acquire a list of data requested by the accountants concerning your employees.
- Make sure you confirm by double-checking that all accounts have been adjusted and inspected, that any developments have been detected, and that all essential information is obtained before closing the accounts.
- Establish data for VAT return filing & economic substance filing is available (only if relevant).
- Maintain communication throughout the year with the hired audit firm in Dubai so that any changes, new events or issues that appear are detected.
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Annual audits can be a time-consuming and overwhelming process for businesses as complete compliance while meeting the accounting standards is mandatory. The experts at our audit firm in Dubai can take care of all your audit requirements in UAE which is why availing of our services is the ideal option. Audit Firms in Dubai are approved by the UAE government and most of the free zones such as JAFZA, DMCC, DAFZA and more and therefore can offer you tailor-made solutions. Contact us today!
Umapathy Anuruthan, is a Senior Auditor at the firm, holds a Business Management Degree and carries with him an experience of 6+ Years, having worked in two of the Big 4 audit firms. He has a ‘hands-on’ understanding of external audits and financial reporting and is well-known for his approach to ensuring the highest quality and accuracy in audits for clients of numerous industries.