Importance of Financial Audit for your Business

Auditing is an official examination and verification of the accounts and financial records of an organization. A financial audit is an objective used to evaluate the financial statements to ensure that the records are accurate and a fair representation of the transactions, which the organization has claimed to represent. There are several ways to carry out the evaluation procedure; it can be done internally by the employees of the organization or externally by an outside firm.

On the other hand, you have to dig deep into the financial condition of a company, including the sensitive financial areas. A financial audit may also responsible for assuring the shareholders or the investors that the financial statement of the specific company is accurate and conform to the accounting standards. Besides, there a few stages of a financial statement audit, which are as follows:

  1. Planning and Risk Assessment:

Planning and risk assessment is the primary stage of an audit. It involves gaining an understanding of the business and the business environment in which it operates. All this information is used to assess whether there may be risks that could impact the financial statements of the specific organization.

  1. Internal Controls Testing:

The next step is for the internal to control the testing, which includes checking the security of the computer, account reconciliations, and how many people are needed to complete the tasks. Auditors in Dubai, UAE, concentrate on areas such as proper authorization, the safeguarding of assets, as well as the segregation of duties. It is upon his choice whether to base the financial audit on sampled transactions to determine the degree of control effectiveness. If the controls or managements are ineffective, then the auditor must follow other procedures to examine the financial statements.

  1. Substantive Procedures:

This procedure is used to collect pieces of evidence that the figures made in the financial statement are reliable. Auditors in Dubai, UAE rely on this stage when the internal testing control goes strong. There are several procedures linked to this; some of them are:

Analysis:

Conducting ratio compared with historical, forecasted, and industry results to spot the irregularities.

Cash:

Reviewing the bank reconciliation, count on-hand cash, issue bank confirmations, and confirm restrictions on bank balances.

Revenue:

Examine the documents, which support the selection of sales, review subsequent transactions, and confirm unusual items with suppliers.

Finalization:

It is the final stage of auditing, in which the audit services in Dubai have to compile the reports and the statistics that he collected during his survey. There are specific tools developed especially for the performance of a financial audit. The Computer-Aided Audit Tool (CAAT) is the tool used to analyze the large volumes of data and look for any anomalies. It has the ability to review all transactions and test all the data without making a mistake.

A financial audit is a costly examination of the financial statements of a specific organization. A lot of companies downgrade to a compilation and review due to its cost.

Advantages of the Financial Audit for Your Company in Dubai

One who has a business or a company with several people who are bound for completing various tasks may bear a risk of error or flaws in the business. The audit is the best solution to note out all these errors if you have your company in Dubai. It can be very useful for a company as it will improve the efficiency of the business. The control and management will better understand the working and financial system of their company.

The supplier or the financers will know that the risk is properly assessed and effective strategies are being used to overcome them. With the assistance of the auditing process, the employees will know the financial range which needs development and the way in which this development will happen. Having an audit in your company will also decrease the risk and then the cost of capital.

In the whole process of auditing, the management will be able to identify the flaws in financial records or frauds. Some other benefits of having a financial audit of your company in Dubai may include the following:

Improves communication:

Most of the higher authorities depend on the data which is provided to them by the management. This data is needed to make an important decision about the plans of the company. There is a big chance of error in the data collection, and audit is required in order to remove that error. The audited financial statements are vital for the success of a company because they provide accurate and timely information about the financial situation of a company. The management may know that the auditing committee will highlight the errors, whether they are intentional or unintentional.

Better management:

Researches show that the companies that undergo the audit process are more profitable and have a better management system as compared to the companies that do not have the annual financial audit. The selection of a perfect company that will provide auditing services is a significant thing for the progress of your business. Experienced auditors have a lot of experience in the profession, and they will perform the process in a better way. They also help you identify the small opportunities which can form a significant improvement soon.

Expert recommendations:

The auditors are trained in such a way that they focus on the tightening and improvement in the business processes. This process will decrease the amount of risk in financial data. An auditor is the one who might provide you with the unbiased suggestion apart from his likes and dislikes. The company might apply some strategies for so long that they become dangerous for internal control. The auditor will also help you identify these types of dangers. By avoiding them, you will be capable of developing a new and more effective system of strategies for your business.

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