Managing Internal and External audit procedures is an essential requisite for businesses to function in Dubai. An Internal audit maintains the Company’s financial profile and helps companies to overcome financial stress. In contrast, an External audit procedure is conducted to enforce financial stability and to rectify last-minute mistakes. Thus, strict measurements are enforced when conducting audits to ensure a detailed and accurate audit procedure. An approved top audit firm in Dubai can ensure an efficient and seamless audit procedure for your company, in full compliance with the set regulations and laws.
What is an Internal audit system?
An internal audit system refers to a body that evaluates and monitors a company’s internal financial control, accounting processes and corporate governance. It is a manual process and facilitating activity designed to bring a systematic and disciplined approach to assessing the company’s internal operations, preventing risk management, providing insights on elevating results, and securing assets.
What is an External audit system?
An external audit involves a third person/part that examines the financial records maintained by a company to provide a statement that corroborates whether an audit is substantial. External auditors are responsible for analyzing the overall financial management and procedures of the company and making better suggestions to run and perform it. Such an examination has to be conducted by a CPA-certified outsider, not an internal employer to ensure that the results are unbiased.
Read more: How to prepare for an external audit: The ultimate guide
How to conduct an audit procedure in Dubai?
The entire audit procedure is conducted through the following steps:
- Preparing an audit plan
- Building trust with the client
- Performing control methods
- Finalizing draft
- Issuing audit report
Therefore, when preparing an audit, all of these procedures must be performed effectively and precisely.
1. Audit planning
The planning phase marks the beginning of the audit procedure. A meeting is held between the auditor and client, discussing the scope, risk factors, and objectives of the audit. Every bit of information and data are collected and the remaining details of the audit are planned to perfection.
2. Developing a good client relation
Obtaining the client’s trust is also an important step to take when planning the overall audit. Information on the auditor designing the audit and key areas of concerning inquiry are all mentioned in the plan.
3. Preliminary Survey/Questionnaire
In a general overview of operations, further data is collected and everything is reviewed with key personnel.
4. Fieldwork and Transaction testing
Steps identified in the planning phase and preliminary survey are followed up and put into best practice. The major role of the auditor is to concentrate on transaction testing on the information obtained from the survey. Testing validates whether the data obtained is functioning effectively or not so that a final draft of the audit work is created concluding only significant findings.
5. Reporting draft
In summary of the fieldwork, the final draft report comprising recommendations, opinions, and significant findings is presented to the client for review or to make improvements and suggestions along with a timeline to patch up the audit report.
6. Follow-up report
The last course of action involves the follow-up report. As per the client’s suggestions. A few unresolved findings will also pop up in the follow-up report and can be reported annually to the higher committee.
Purpose of conducting Internal and External audit procedures
Internal and External audits have the same objective, the audit process is the same for both, with notably slight differences in the procedures. The internal audit essentially focuses on the internal assessments and procedures to rectify and prepare an authentic report. On the other hand, External audit is engaged on a very defined scope which often leaves internal audit within limits. Thus, both audits carry out the procedure in different stages and directions.
Read more: Top roles and responsibilities of internal auditors in UAE
Role and Stages of Internal audit procedure
- Internal Audits play a huge role in governing the company’s Internal Control as well as Corporate Governance
- Audit reports are generally used within the company to improve internal management systems so the auditor shows a casual performance
- Only a targeted department or self-selected audit team is indulged in the audit procedure, and they do not require a CPA certification
- Internal audits can maximize the utilization of resources and cost minimization
- Mistakes committed by employees can be immediately recognized and solved. Thus, enhancing effective work rate.
Role and Stages of External audit procedure
- An External auditor must be a Certified Public Accountant (CPA) -acknowledged and must be an outsider
- Their major role is to state an opinion on whether the financial statements give an authentic and fair view concerning the company’s financial status. This may include Internal audit files
- They ensure that the audit is error-free, and they also report hidden fraudulent mechanisms and the overall audit report annually
Consult top Audit firms in Dubai for premiere Audit Services
We are a top-notch Audit firm in Dubai that cultivates excellent internal and external audit services. We lay hold of clients’ demands and manage financial statements effectively. We have over 30+ years of experience in providing premiere audit services, in compliance with UAE law.
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.