Financial records are frequently preserved for accounting purposes since a business runs on its fixed assets. It is essential to understand the audit methods required to verify these assets. If these methods are not followed, they could seriously compromise good corporate governance and financial management.
Therefore, every firm in Dubai needs to conduct an annual audit of its fixed assets. This audit is carried out to make sure that all assets are maintained and are still in good condition. It is also used to keep track of any depreciation that has taken place over the year.
Audit firms in Dubai identify any flaws or weaknesses and immediately report them to your respective company’s management. These audit firms conduct audits of fixed assets to ensure they are properly accounted for in the financial statements.
A few of the most important procedures that need to be followed to audit fixed assets in Dubai properly are:
- Make a list of all fixed assets and their approximate value
- Verify the existence and condition of all assets
- Track any depreciation that has occurred over the year
What is a fixed asset?
A tangible asset purchased for use in a company’s operations to produce revenue is known as a fixed asset. It includes a broad range of assets held by companies, such as real estate, buildings, plants, machinery, tools, vehicles, furniture, stock, and office supplies. As a result, the process for certifying fixed assets might vary and is dependent on the specific item.
Purpose of auditing fixed assets
- Auditing fixed assets is an important process that helps to ensure the accuracy and completeness of the organization’s financial statements.
- It also serves as a way to verify the existence and condition of the fixed assets, as well as to assess their value.
- The audit helps to identify any irregularities or fraudulent activities related to the fixed assets. It ensures the accuracy and legality of fixed assets.
What are the audit procedures to verify fixed assets in Dubai?
Companies must ensure that they have appointed skilled professionals to carry out various audits. It will assist in maintaining your company at a high level of quality and productivity. This can be achieved through various processes, and one such important one is preparing a final audit report.
Before commencing any kind of process you require appropriate documentation to prove your company’s worthiness. Since this document is used to prove your credentials, it should have sufficient evidence to prove your track record and reputation.
Generally speaking, the report should include any new findings made when performing the analysis. Moreover, it provides a complete view of the business operations and future implications of any change.
Read more: Why are annual external audits so essential?
To properly audit fixed assets in Dubai, you will need to follow these procedures:
- Reviewing the supporting documentation – The first step in conducting an audit of fixed assets is to review the supporting documentation, such as purchase orders, invoices, and receipts. This documentation should be reviewed to ensure that the assets were properly recorded in the accounting records.
- Observing the physical inventory of the fixed assets – Next, the auditor will observe the physical inventory of the fixed assets. This is done to ensure that the assets exist and are in the condition that is stated in the financial statements. In general, auditors will request evidence of an asset’s existence, such as invoices, contracts, or purchase orders. They will also want to see evidence that the asset is being used in the business, such as maintenance records or usage reports. For some assets, such as land and buildings, the auditor may also want to carry out a physical inspection.
- Testing the controls – Finally, the auditor will test the controls that are in place to ensure that the assets are properly accounted for. This includes testing things like authorization procedures and physical security controls.
Once the auditor has gathered all the relevant evidence, they will then assess whether the asset is properly recorded in the financial statements.
Audit reports are important in companies because they provide information about the performance of various aspects, such as sales, marketing, accounting, and legal issues. You need this report to show how effective and efficient the department is. Additionally, this shows what is expected from the employees, and the results of various tasks, and gives the insight that is required to enhance the efficiency and effectiveness of the firm. These reports form part of the audit planning and preparation as well as the provision of a detailed analysis of the financial condition of the company.
How can Audit Firms in Dubai help with this process?
You may be wondering how the Best audit firms in Dubai can help with this process.
The answer is that:
- They provide expert advice and assistance to ensure that the audit is conducted properly and that all the necessary information is gathered.
- They can also help to ensure that the audit is conducted on time and that all the required documentation is prepared. This will help to minimize any delays in the process and ensure that the audit is completed as quickly and efficiently as possible.
A reliable and accurate fixed asset audit is critical for businesses in Dubai. By following the proper audit procedures and using the right tools, you can ensure that your business’s fixed assets are properly verified and accounted for. Be sure to take these factors into account when conducting your audit and you’ll be able to get an accurate picture of the state of the business’s fixed assets.
Kasun Liyanage is an Audit Manager with over 7 years of experience dealing with diversified corporate clients. He not only manages the team’s work schedule but also is an expert in handling audit areas such as external audits and fraud investigation, Internal control benchmarking and best practices and well as preparation of financial statements and IFRS compliance.