A statutory audit in Dubai is carried out by autonomous financial auditors unrelated to the company and have no invested interest in the company's performance. It is much easier to provide the auditor with relevant documents required for an audit of the company when its staff understands an audit procedure in Dubai. In general, auditors in Dubai will work on an audit report based on the government standards for recording accounting entries. For this purpose, an auditor will require financial statements, trial balance, general ledger, VAT Returns filings report, and legal documentation. Below is the scope of an audit and the documents needed for the related audit scope by an external audit firm in Dubai.
To start an audit, the board members, shareholders, and key management employees select an audit firm in Dubai to conduct the audit. Once the audit period is finalized, the same gets communicated with the established third-party audit firm, and an engagement letter is signed and stamped by both parties agreeing to the terms of the audit. An engagement letter also gives the auditors authority to conduct the audit at the company's premises, such as the office and warehouse. The last year's signed and stamped financial statement is handed over to the audit team to study and understand the current year's balances and adjustments in the books.
The easiest way to understand money flow to and from the company is to study the bank statements. Hence the auditors require the bank statement for the audited period and the previous year's balances with the bank's confirmation of the balances mentioned in the bank statement. For this, the auditors can directly email the bank to confirm the balances mentioned in the statement and the financial records. At a given time, the company may have bank accounts locally and internationally.
Read More: Why are annual external Audits so essential?
General Ledger lists all accounting and bookkeeping entries a company has posted during the accounting period. While studying the financials and understanding the numbers, an auditor ensures that the final value mentioned in the trial balance is accurate; it is done by analyzing the general ledger accounting entries. Hence the auditor requires the trail balance and general ledger to understand the transactions undertaken by the company by asking relevant questions to the finance department.
An audit firm in Dubai runs the trial balance and general ledger entries through its software and picks up specific entries for which the auditor requests further documentation. There will be a series of questions for the auditor to understand the journal entries posted and the management's judgment while preparing the financial records: several receivable and payable balances are mentioned in the balance sheet, which requires balance confirmation from the parties. Hence, the auditor asks for signed and stamped copies of balance confirmation from the related parties. In case of discrepancies, the auditor will mention the reason for the discrepancy and add notes in the audit report.
The auditor will verify the fixed asset register and the calculation of depreciation of the fixed assets. To verify fixed assets, the external audit firm in Dubai will arrange for the stock count and assets verification, such as plant and machinery. To understand the liabilities, the company must disclose in the financial records the loans, leases, and any material contracts they have with banks or other companies. Documents related to loans, leases, and fixed deposits must be readily available upon request by the auditor.
Staffing is one of the high costs of the organization. The government dictates payroll procedures to ensure the provision of rights of the employees. The audit company in Dubai must study the payroll calculation in compliance with the standards set by the government. The estimate for gratuity, overtime, and salaries are provided per the labor contract and imposed by government regulations. A head count report shows the movement of the staff within the organization, the hiring of new staff, and even the management of budgeted headcount in the given accounting period.
Legal documents are a must for an audit. The auditor will verify the validity of these the government dictates payroll procedures on the list of documents required for an audit in Dubai are as follows:
The company has to disclose the number of shares issued and changes in the issued and pending shares to be published.
Minutes of the meeting disclose the company's board members' critical decisions regarding the financials, the economic substance regulations, and even changes in any course of the strategy of financial recording. The meeting minute is an essential document for audit purposes; hence The company should arrange this for the current year and the past years. It ensures that the financial decisions during a board meeting align with the company's strategy's financial course changes.
Read more: Why is audit important for your business?
The audit firm in Dubai will check the net tax booked by the company by examining the calculation for input and out tax recorded in the financials.
The exact amount of tax is paid to the Federal Tax Authority, or if there are any acceptions. The audit firm in Dubai will also ensure that the VAT filing is done according to Article 64 of the VAT law decree provided by the FTA of UAE.
AFD maintains its autonomous status from the management and the board members so that there is no influence on the company's audited financials. We have decades of experience auditing several companies in the UAE. As a prominent audit firm in Dubai, we ensure that your external audit is completed seamlessly. It doesn't matter if you are a seeded start-up, a new company, or an established company in Dubai looking to conduct an audit.
We enhance our client's audit experience so it can not only be a mandatory task for the company but also assist in bettering the company's internal controls and getting a hassle-free audit experience for the following years.
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.