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Your Guide To A Successful Financial Audit UAE

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One of the reasons year-end reporting is challenging is because of financial audits. But, in the view of external organisations such as banks, government agencies, and shareholders, these audits define you as a trustworthy company. Furthermore, listed firms are compelled by law to have their financial statements audited, so there's no way around it!

Apart from small, privately-owned organizations may be required to undergo thorough financial audits by independent firms in addition to publicly-traded multinationals. As a result, it's critical to take the appropriate actions before, during, and after the audit to make sure that everything runs well. This step-by-step guide to an effective financial audit will make things easier for business owners. However, before we get into it, let's define what financial audit is.

A financial audit is a thorough examination of your company's finances, including financial statements, documents, processes, and accounting. It is carried out by a third party to ensure that all of your financial accounts are correct. Auditing can also be ordered to establish a company's financial health by examining accounting, internal controls, and broader financial information in depth. It's usually implemented to ensure that all actions are legal and that there are no instances of embezzlement or embellishment to manipulate investors.

How to perform a successful financial audit in the UAE

There are two types of audit – internal and external audits, and there are a few things you can do to ensure that everything goes smoothly if you're about to conduct one. Here are ten steps to conduct a successful financial audit.

1. Plan well

The first thing you should do is start preparing for your scheduled audit. When you plan ahead of time, you can alleviate the stress of doing everything at once. It also allows you to devote time to preparing for the audit on top of your regular duties. This way, your day-to-day tasks won't be disrupted, and you'll be able to completely participate in what's going on. Treating audit planning as a year-long process is a great way to plan ahead. Work with a financial audit expert to ensure that your audit goes well.

2. Remember past mistakes

Almost every firm will make a mistake at some point. If you had trouble with last year’s audits, go over them again and try to find out what went wrong. You can help boost the success of your present financial statements by doing so. Pay special attention to sections where you’ve had trouble and ensure that your team communicates effectively to avoid missing anything.

3. Understand the recent accounting standards

Accounting rules change regularly. Your audit may be impacted if new regulatory standards are implemented. It's critical to familiarize yourself with present accounting standards so that you know what to expect and how to execute any new tax rules.

4. Calculate changes in business activities

The existing accounting rules change as per the nature of your business. If you have made any changes or additions, make sure that you understand what it means for rules. You need to report more or reveal new information if you have additional revenue or have regrouped your management structure.

5. Examine your tax records

Examining and analyzing your company's tax records will assist you in comparing your existing fiscal statements to records of any liabilities or taxes paid. This allows you to identify areas of questionable reporting, such as excessive spending statistics, and avoid repeating prior errors. It will also assist you in gaining a better knowledge of your company's overall picture. You'll have plenty of documents to refer to because records should be retained for at least seven years.

6. Assign responsibilities

Make an effort to set a timeline and then assign duties to ensure that your company is working together. You must be able to allocate the duties to ensure that you're covering all of your bases. If you require certain documents, request the appropriate source within your business. Begin by accomplishing more difficult or complex duties, then work your way down to the smaller, more straightforward steps that need to be completed. As soon as the audit begins, you should have copies of everything accessible, so aim to stick to your timeline.

7. Organize your records

Apart from allocating responsibilities, you also need to create folders and subfolders to organize all the information. This helps improve the success of your financial audit as it covers everything in one place for the auditor. Make sure to include any schedules, work papers, financial statements, cash, liabilities, revenue, payables, confidential information, fixed assets, and anything that seems important.

8. Obtain more information

If you're ever unsure of exactly what you need to prepare, take some time to find the answers you need. Make sure you understand what you need to minimize any delays in processing or financial irregularities that can cause a failed audit. Working with a professional CPA, such as Alchemist Accounting is the best way to ensure that you're following the rules. We can assist you in gaining control of your books and managing your funds so that you can successfully complete an audit.

9. Do a self-assessment

Do an internal audit as a kind of self-assessment if you want to examine how you've done. This will allow you to evaluate everything you've put together and help you see where you are before the external auditors arrive. While this should be done in a completely legal manner, it does allow you to check to see whether you have all of the relevant paperwork and information on hand to facilitate a seamless external audit. If you want to have a productive audit, be ready to explain all of your financial statements as well as any discrepancies.

10. Evaluate results

Actively communicate with the auditors during the external audit. You'll want to make sure that your reports are a true reflection of your company, and it's a good idea to make yourself available if your auditor wants to attend meetings to help understand any disparities or variations.

Once you've received the results, hold a post-audit closing team meeting to discuss the report. This gives you a better idea of how well you did and where you can still improve. You'll be better equipped to make changes that will last into the next fiscal year if you evaluate your findings straight away.

If you want to successfully run your firm, you'll need an appropriate financial audit as well. There may be penalties, consequences, and fines if you fail an audit. The person conducting the audit may report improper bookkeeping to the IRS, which can result in fines or even criminal penalties. Alchemist Accounting will assist you in maintaining your financial statements and books in check. We developed advanced tax methods, have assisted with monthly bookkeeping, sales tax, and payroll, assessed businesses to maximize profit, and worked with our clients in paying less tax each year.

Alchemist Accounting wants you to have confidence in your financial statements, knowing that they are correct and reflect your actual condition. Contact us for a FREE tax consultation, where you can learn more about our accounting and auditing services and how we can help you.