A statutory audit is carried out by autonomous financial auditors who are 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 understand 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.
Planning an audit
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 finalised, 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.
Bank account statements and Bank Balance Confirmation
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?
Studying general ledger and trial balance
General Ledger is the list of 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 analysing 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.
Evidence of transactions and balance confirmations
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.
Fixed Assets, Loans, Contracts & Leases
The auditor will verify the fixed asset register and the calculation of depreciation of the fixed assets. For the purpose of verification of 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 wither with banks or other companies. Documents related to loans, leases, and fixed deposits must be readily available upon request by the auditor.
Payroll and headcount report
Staffing is one of the high costs of the organisation. 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 labour contract and imposed by government regulations. A head count report shows the movement of the staff within the organisation, 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:
- Tax Registration number ( TRN Certificate)
- Trade License copy
- Copy of Economic Substance Report or notification as per law to understand the core income generating activity ( CIGA)
- Share certificates
- MoA – Memorandum of Association
- AoA- Articles of Association
- Share Holders Registration
- List of Directors
- Shareholding pattern
The company has to disclose the number of shares issued and changes in the issued and pending shares to be published.
Minutes of Meeting of the company’s Board members
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.
Hiring the right Audit Firm in Dubai
An audit firm in Dubai 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.