If you operate or are planning to start a business in Dubai, then you should know that the UAE has many important regulations in place which must be followed. Not complying with these essential standards can result in hefty fines, or worse, can even result in having your business shut down by government authorities. One important requirement is that you maintain accurate financial accounting for your business that’s truthful, transparent, and free of any error or fraud. To that end, contracting with a professional audit services provider like MSZ Consultancy can help ensure the accuracy of all your required financial reporting.
What Company Financial Audits Accomplish, and Why Auditing Matters
Auditing is an independent examination of financial statements to verify the accuracy of the data presented, and to prevent any unwanted incidences of errors or unintentional fraud. A third-party assurance of your financial statements adds confidence for your upper management, assuring them that reports are accurate and free of any misstatements, enabling them to make better data-driven business decisions. In addition, a business audit can also help make sure that you’re in compliance with all UAE business standards and requirements.
Planning & budgets
Your business leadership needs to be informed regarding costs & spending as it relates to your specific budget allocations. Data provided by an audit can also be useful for helping businesses and individual departments to set future budgets.
Government compliance
Auditing helps ensure that financial statements are being prepared in accordance with set financial standards and regulations in Dubai and the UAE.
Credibility
Having audit information in hand serves to enhance your business credibility in terms of making future investments to expand your market share.
Detect any errors or fraud
A third-party audit can help to uncover any financial discrepancies – or even potential fraud – by revealing any errors of omission or willful commission.
Documentation
Auditing also provides necessary evidence and documentation concerning transactions and cash flow matters.
Major Auditing Categories
A small business audit or other company financial audit can be conducted for one of many reasons, but audits generally fall into one of two major categories: internal and external. Here’s a brief synopsis of each:
Internal Auditing
An internal audit is performed by a group of auditors appointed by the company to take a closer look at how internal business operations are conducted as it concerns matters of finance, budgeting, and spending. The auditors entrusted with this task should have a thorough understanding of the inner workings of your business environment, along with any finance-related processes. For this reason, some businesses are more comfortable having an internal audit conducted by internal parties, but if you have no staff or system in place for taking on such a task, you can also entrust the job to a reliable outside auditing professional.
External Auditing
While an internal audit can be conducted internally by your own team of employees, an external audit is performed by an external auditor or auditing provider approved by your company’s shareholders. While an internal audit certainly has value, it can also be more prone to display some internal bias, whether intentionally or unintentionally. An external audit, on the other hand, offers a truly objective, unbiased, and accurate assessment of the financial status and overall financial health of your company. In addition, having regular external audits conducted is a mandatory requirement for all businesses registered to operate legally inside the UAE.
Benefits of an Internal Audit
There are several reasons why you’d want to have an internal audit conducted for your company. Here are a few specific benefits of internal auditing:
- Any business organization that chooses to conduct systematic internal auditing will be able to attain a precise understanding of its financial performance and analytics.
- Internal auditing also serves to provide effective insights for proactive risk management.
- Auditing can help any business establishment to figure out its financial instabilities, and to detect any other operational irregularities.
- As such, auditing can be used as an effective managerial tool, as well.
- Make sure you’re compliant with all applicable rules and regulations.
- Find ways to improve the overall efficiency of your business and its processes.
Benefits of an External Audit
So, what’s the point of an external audit, then? Choosing to partner with a professional external audit services provider like MSZ Consultancy allows you to gain a better objective understanding of the financial position of your business, among other benefits:
- In addition to the many benefits listed above for an internally-conducted audit, there are also several good reasons to choose to have an external audit performed as well.
- While an internal audit is primarily designed to add value to a company’s operations and help the company to achieve its own goals, an external audit can provide another level of insight with even less opportunity for any bias to creep in.
- An external audit helps to build financial trust for your company among your customers, clients, lending partners, and other business associates.
- External auditing ensures the veracity of all your financial transactions, records, and processes.
- An external audit can assist in preventing any instances of fraud or financial malpractice.
- External auditing also ensures that you remain compliant with all applicable regulatory accounting laws.
An external audit is actually a mandatory requirement for any business establishment registered in Dubai or the greater UAE.
The Importance of Finding a Good Auditing Services Provider in Dubai
Essentially, finding the right company financial audit service ensures that the way you manage your business finances is congruent with your company’s principles & goals, and also conforms with regulatory requirements established by Dubai and the UAE.
- Evaluate the risk of any potential misstatements : Without a proper auditing process in place, your business may have trouble creating consistently reliable financial reports for both internal and external purposes. An audit will help you to understand more about resource allocation, and to know which areas of your business are truly profitable – and which aren’t. An audit will also help you to prevent making any financial misstatements about your company.
- Align your processes with your business objectives : An effective audit system is also significant because it helps a company to choose the best processes and financial strategies for accomplishing its various business objectives. Regular supervision and monitoring of your financial practices, both internally and externally, is essential when it comes to achieving your goals in a manner that’s effective, ethical, and legal.
- Assess capital costs : Capital costs are a huge liability for any company, regardless of size. From entrepreneurs to small businesses to large enterprises, having a firm grasp on capital expenditures can help you better understand the risks and rewards of any business investment. And a good professional auditing partner can provide insights to help you to identify, categorize, and understand all of your business spending.
- Assurance of financial accuracy : At the end of the day, an external audit should help you to identify any errors in your financial statements, and should offer some corrective solutions to address any found discrepancies. And MSZ Consultancy is here to provide assurance to the local authorities – as well as to your stakeholders – that your financial data is both accurate and fair, thus bolstering your reliability and credibility with all parties concerned.
What the Auditing Process Looks Like
Interested in looking closer at what a business audit provided by MSZ Consultancy entails? Here are some key steps of the process:
- Planning: We begin by gaining a better understanding of your business, so we can make the most helpful auditing plan:
- Determining the amount and scope of audit needed
- Understanding your organization and the businesses related to it
- Delineation of your related tasks and procedures
- Risk assessment of any mistakes found in your financial statement
- Project the amount of time required to complete your audit
- Financial audit testing, which involves:
- Conducting applicable audit tests
- Review of all invoices pertaining to business expenditures
- Clarify that each expense is classified correctly, including verifying the identity of each vendor
- Account analysis, which includes:
- Checking all the details of the account against information presented in your documentation
- Documenting reasons behind any account changes since your last audit
- Conducting research to gather necessary information to justify any changes or discrepancies
- Preparation of audit report, which details:
- All gathered information about your organization
- Explanation of the auditing tests being used for this report
- Revealing the details of your financial statements
- Uncovering any weaknesses in your internal control processes, along with any other issues which still require further elaboration
- Submission of the audit report to all required authorities upon its completion
Why You Should Entrust Your Business Financial Audit to MSZ Consultancy
- Who is MSZ Consultancy? : MSZ Consultancy is a leading company formation and maintenance consultant in Dubai, bringing more than 15 years of experience to our trade. We have strong relationships with government officials and all the relevant authorities, and we know how to make the business of doing business in Dubai and the UAE easier for you!
- What do we offer, and how can we help? : We offer all the expertise, advice, and personalized counsel you need to get your business off the ground and running, whether you’re a solopreneur, small business organization, or larger business enterprise. We also provide financial, legal, auditing, and other corporate services to help our clients along on their successful business journeys.
- Why choose MSZ Consultancy for business audits and other services? : We don’t just know the business of business consultancy in general. We also know Dubai and the UAE in particular – we live here, we do business here, and our ultimate goal is to help YOUR business to succeed here! There’s no need to wait – get in touch with us to schedule your FREE initial consultation today!
Frequently Asked Questions
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How does an internal audit differ from an external audit?An internal audit is a more regular auditing practice performed internally by a business or organization, intended to be presented only to internal managers and stakeholders. An external audit, on the other hand, is a more thorough financial examination and evaluation conducted by a third party, mainly for the purposes of external reporting to external shareholders, related parties, and government authorities.
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How long does an audit usually take?Some of that will depend upon the nature and scope of the audit. In many cases, an audit is scheduled to occur over the course of about three months. This will typically include four weeks of planning, four weeks of fieldwork, and four weeks of compiling the final audit report.
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How confidential will the information provided in an auditing report be?That’s certainly a fair question. Confidentiality is one of the most important code of ethics for any professional auditor. In other words, the information contained in a financial audit will not be provided to anyone who has not been granted specific access by the client or its designated parties.
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Why would you want an audit of your financial statements?As we’ve laid out for you on this page, the importance of conducting regular audits for your business really cannot be overstated. A capable auditor can help you clear up many internal opportunities to improve your company’s financial practices, and can also provide the reporting information necessary to keep you compliant with governmental requirements in Dubai and the UAE.
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Is a statutory audit required in Dubai?In a word, yes it is. A statutory audit helps to ascertain and defend the correctness of financial records and statements reported by a business or other organization. This type of financial audit is required by the government, and the results provided can also help to build trust with customers, clients, and those in the public eye. For these reasons, an audit of this nature should only be conducted by a trained, experienced auditing professional.
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