A statutory audit is required by law and is designed to evaluate a company’s financial health and records. They are generally undertaken for the general public. Audit firms provide an impartial and fair view of a company’s financial health by reviewing its accounts & accounting processes.
Government organizations in the UAE must have their accounts reviewed by statutory auditors. A company’s shareholders can select any qualified statutory audit in Dubai at the annual general meeting.
Statutory audit requirement in UAE
Sometimes, audits are ordered by the government to screen and evaluate business performance. But what exactly is the purpose of statutory audits in the United Arab Emirates?
How can companies in the UAE ensure that their audit requirements are met? Our objective in this article is to examine how audit firms in the UAE fulfill the statutory audit requirements in the UAE.
Benefits of Statutory Audit
A Statutory audit is a great option for businesses because it offers many benefits. Among the benefits of a Statutory Audit for a business are:
1. Increased authenticity of financial statements
- The auditor conducts a statutory audit to verify that the financial statements are correct.
2. Assure the Management’s Attention
- The statutory audit will ensure that the management has paid sufficient attention to the fulfillment of business responsibilities.
3. All Compliance Requirements for the Company
- Companies must adhere to the laws and regulations of their jurisdiction in order to survive the current world.
4. This helps in understanding the company processes
- An audit of a company allows management to gain a better understanding of the business processes. Management will be able to analyze the processes and make plans for the future.
5. Easy Access to Loans and Other Forms of Credit
- An audit report is important because it helps management get loans from banks as well as allows the business to obtain other types of credit.
Why is a statutory audit required in the UAE?
A statutory audit provision in the UAE fosters financial accountability, which benefits society. As a result, companies can present accurate financial data to the public. Audits perform a statutory inspection of accounting records, bank balances, and transactions related to the economy. An auditor is appointed by the General Meeting of Shareholders every three to five years.
How to Conduct Statutory Audit
An audit is usually conducted when the company is ordered to do so by the concerned authority. The following steps will explain how you can perform a statutory audit of your business:
Step 1: Reviewing the Internal Audit report
To get a clear understanding of the workings and finances of the company, the first step is to go over the internal auditors’ report.
Step 2: All conflict situations should be reported
This internal audit report will identify inevitabilities and provide solutions that will improve the profitability and effectiveness of the company. All these suggestions should be taken into consideration by the present auditor. The points should also reach the company’s management.
Step 3: Review the previous Statutory Audit report
In addition to providing a glimpse into how the company was ranked in the past, the previous statutory report will also help with establishing the company’s statutory audit report.
Step 4: Acquire a thorough understanding of the accounting and auditing software used by the company
Many businesses use accounting and auditing software to help them keep track of information about their business. The auditor is responsible for understanding accounting and auditing software and how they work because there are many options to choose from.
- Understanding How Costs and Expenses are approved
- Identify the expenses associated with the business functions related to the goods and services to be audited.
- Defining the company’s marketing, sales, and partnerships policies
- Marketing, sales, and partnerships vary from company to company. In order to provide reliable solutions, the auditor needs to learn more about the organization.
- Find out more about the company.
Above are merely a few of the steps. There are different business activities involved in every business. It is the responsibility of an auditor to understand these activities and, if necessary, to analyze more options to provide the auditor with more details about the business.
Providing that a company’s management follows the abovementioned process, the statutory financial audit will be conducted comfortably and cleanly. To obtain the complete and desired result, the auditor must add more steps to the statutory process in addition to the above list.
Why Choose Audit Firms in Dubai For Statutory Audit Services?
Farahat & Co ensures that all financial transactions are recorded accurately and error-free for its clients. You can count on our professionals to assist you with all your accounting and auditing needs.
To meet the needs of our clients, we always provide personalized and customized services. Whenever our clients have questions about statutory audit requirements, we are always available to answer them. Don’t hesitate to get in touch with us for further information.
Theshani is a Senior auditor and has experience of 4+ years in providing audit assurance and advisory services to a wide range of industry clients. She continues to stay on top of ever-changing industry dynamics by continuously learning and developing expertise.