Every business in Dubai, UAE, regardless of its size and nature, has to measure its current status and position in the market to ascertain if it is moving in the right direction or not. For gaining deep insights, the companies may carry out audits to get a vivid picture of the company.
Before carrying out an audit, the certified forensic auditor must first understand why they need an auditor and choose an appropriate approach based on their needs. Thus Dubai companies should know the difference between a financial audit and a forensic audit.
What is Financial Auditing?
Companies in Dubai, UAE, conduct financial audits to evaluate financial statements to understand their current financial position and determine the accuracy of records and statements.
A financial audit report describes the company in a nutshell but does not offer specific data about payments or transactions. Financial audits are done annually, and audit reports are also shared with the public, which investors, creditors, and lenders can use to make investment decisions. The main goal of conducting a financial audit is to uncover fraudulent activities and errors in accounting statements.
There are similarities between a financial audit and a forensic audit. Still, the most significant difference is that the former is conducted to collect facts to be submitted in the court of law. Forensic audit firms in Dubai have in-depth knowledge of the legal framework. They also should have experience in both internal and external auditing.
The forensic audit provides evidence regarding certain operations and departments of a company which allows the court to decide if there is fraud or malpractice conducted in the company. Therefore, the auditor is an expert who shares all the details in the court freely and fairly.
The Difference Between Audit and Forensic Audit
Normally, both audit types would seem the same, but there is a major difference which we will highlight below:
- The financial audit is done annually or when a company requires needs one. A forensic audit service is done when there is a sign of fraudulence or any investigation or illegal activities.
- A financial audit helps lenders and investors understand the financial well-being and its current activities. Companies in Dubai can use these reports to make sound investment decisions in the future. On the other hand, a forensic audit allows companies to uncover fraudulent activities or malpractices.
- A financial audit is a routine process conducted at least once per year. Still, forensic audit services are done when a need arises. Again, a financial audit only shares general information about a company’s activity. In contrast, forensic audit firms provide accurate data about certain or fraudulent activities in a department.
Determining If You Need a Normal Audit or Forensic Audit
While determining the need for either a routine audit or forensic audit, companies in Dubai, UAE should consider regular audit if:
1. There have been ethical lapses
2. Specialized expertise is required
3. Organizational policies and procedures are not followed.
4. It is a significant burden to comply with laws and regulations
5. Data breaches in the IT sector
Conversely, a Dubai company may require forensic audit services if:
- Theft and Fraud Suspected
- The entity does not own accounts under the entity’s name.
- Timing differences result from reconciliation procedures
- Whistleblower hotlines are available for reporting thefts of assets and other frauds.
In addition, an auditor plans his work to focus on collecting sufficient objective, verifiable evidence to support his report. In order to obtain the information he needs, an auditor examines documents and traces them. Auditors confirm certain information, such as bank balances or vendor and customer accounts, with the relevant third parties.
However, the forensic and a normal auditor use the same forensic accounting and auditing skills that require special knowledge to carry out various types of engagements that need to be examined as evidence that gives a true and fair view.
For this reason, it is necessary to inform customers about the difference and understanding of how the two audits take place, as well as to understand the needs of the customer and to provide them with good advice on the different types of engagement that take place.
Work With The Best Forensic Audit Firms in Dubai, UAE
Our forensic audit in Dubai guarantees our client’s reputation building, credibility maximization, and standing out among their competitors. To maintain the professionalism of our deliverables, we are ISO-certified.
We currently have more than 1000 clients across the UAE, which includes multinationals and limited liability companies. Forensic accountants at Audit Firms in Dubai provide the services you need, including cash flow forecasts, projection reports, and forensic accounting. This will allow your business to grow. Get in touch with our specialists if you are interested in starting the process. We would be glad to serve you.
Read also: 8 Forensic Auditing Techniques You Should Know In Dubai
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.