Before Starting the Audit Process Companies must be aware of
In Dubai, The audit is one of the most important processes through which the companies can ensure their compliance with the regulations and the accounting principles. Audit can be saw both as a mandatory requirement for compliance as well as an optional process. For Exemplar, audit report submission is mandatory for Dubai free zone companies but it’s voluntary for companies in the mainland. However, mainland Company in Dubai may require an audit when asked by investors. In Any case, preparing well for an audit is necessary to obtain the desired result. Failing to resolve particular issues before an audit will put you in trouble when auditors in Dubai visit your office to the external audit process. So must read this article to understand the key issues you must be sort out before starting the external audit process in Dubai
What are the ordinary challenges faced during the preparation for an audit in Dubai?
- Mediocre bookkeeping and lack of accounting expertise
Properly maintained all accounts and records are the main requirements based on which the audit is carried out. Unfortunately some of the SMEs and startups acquire mediocre accounting practices which may not provide accurate information to the auditors. In a bid to save costs, entrepreneurs try to appoint sub-standard accounting firms which may not have accurate expertise and experience, hence, to reduce costs, the firms take wrong steps which is putting the organisation at stake. This results in a big challenge in the internal and external audit process and the auditors are in a position of Struggle with no solution.
- Revenue ascertainment issues
Incomplete information and accounting records is a Major issue that company face during the annual audit in Dubai. If such an issue remains not be solve, the audit report prepared by auditors in Dubai may fail to provide a clear picture of the company’s financials report. Audit reports prepared in such challenging situations may be unclear and complex.
To solve this issues, the auditors may conduct a substantive test of the revenue received by evaluating the sales invoices, etc. to verify the all audit report prepared. Through the proper analytical procedure, the auditors can draw accurate conclusions and pieces of evidence for supporting the statements.
- Possibilities of fraud and malpractices
Fraud is considered one of the biggest risks a company must detect and sort out before the audit process. If the management and the auditor both are ignore the any chances of fraud, both of them will be held accountable for the after-effects of it. The only possibility to avoid or detect such fraud or malpractices is that the auditor must apply his professional expertise while conducting the audit. When this types of frauds are detected, they must be communicated to the management immediately and the required and important strategies must be applied to take down such issues.
- Lack of proper inventory records
Company usually have a lack approach when it comes to the assertion of the stocks. Then management may consider the inventory assertion as costly and a disruption of the workflow. In this types of cases, audit firms in Dubai may fail to obtain accurate assertions regarding the records of inventory management and maintenance. However, audit firms must be conduct test controls to ascertain the existence and condition of the stock held by the company.
- Lack of an audit plan and improper execution
Most of the companies plan to prepare for an audit when they need for the audit report, otherwise, they do not consider it as an important factor. The audit conducted without any proper plan and execution may not provide significant results. Moreover, an unplanned audit will result in disruptions in the daily activities of a company. It will also result in huge costs as the company may not have any budget set different for the audit process. Company must always keep in mind to prepare a proper plan before conducting any audit process.
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