What are the different types of Accounting Practices in the UAE?
Accounting is a core function of every company irrespective of its size, nature, and type. Accounting is an inevitable part of business organizations and it is similar to looking yourself into the mirror every day in order to make sure that you are ready and looking perfect for an event. In similar manner accounting also helps a business to ensure whether it is ready for any kind of future events such as expansion and if it is ready to face any unanticipated event. Accounting enables you to know your business’s current position and the profit and loss gained by the business.
Even though accounting plays a vital role for the business, many individuals are unaware of it and they don’t provide adequate focus to such a function which in the future opens the way for high-level risks and penalties including losses. Many times, the entrepreneurs or the management of a business doesn’t know or is confused regarding different types of accounting practices in the UAE. Being a leading financial company providing accounting services in UAE, we share some important information regarding different types of accounting practices in the UAE.
In public accounting, the accounts, records, and related services are outsourced to independent companies. Since, some financial documents and other information are required to be disclosed to the public. All control over accounting records are performed by qualified accountants in UAE who are CPA’s or certified public accountants.
In private accounting, individual accountants in Dubai are appointed by the business entity to record their accounting and other information in a systematic way. Since an expert accountant is appointed, all the controls are applied by that expert within the organization.
In this accounting principle, government usually employs state auditors who are eligible to record, plan, and create budget. They forecast the financial, accounting, and other additional information. All controls over these accounting records are imposed by people employed by the government agencies.
Professional accountant in Dubai or auditors are usually called as external accountants. The auditors check for the accounting practices followed, and determine the degree of reliance on accounting records. After which, they issue the final audit report.
Financial accounting is a type of accounting process which involves tracking all the financial transactions of a business. It is considered a traditional practice in which all the accountants are expected to perform the accounting. A financial accountant by following globally or locally accepted accounting standards provides a financial report which contains a summary of all the financial transactions of a business.
By tracking the financial position based on cash inflow and outflow as well as the position of assets and liabilities the financial accountants try to provide reports regarding the circulation of funds in the organization. The financial statements prepared may include profit and loss account, balance sheet, cash flow statement, statement of change in equity, etc. which may be used by parties like shareholders and investors. Every business may maintain its own accounting procedures and software.
Cost accounting deals with the analysis of all the costs incurred in producing finished goods by a company. It mainly involves fixed costs, variable costs or input costs, etc. Analysis of this cost will help a company to make decisions regarding spending, inventory, supply, pricing, etc. This accounting process involves finding variations between the evaluated costs and the actual costs incurred in order to analyze the difference. This information can be used by the company to take corrective actions if there are any severe variations.
Forensic accounting acts as a financial detective as it is conducted to detect any fraud or malpractices performed in the business and to find evidence of such activities. The main aim of conducting such accounting is to provide evidence in the court of the law regarding any embezzlement and an accounting report is handed over to the court by the accountants who detect whether the company is prone to such activity or not.
Management accounting is quite similar to financial accounting as it involves the analysis of the financial transactions of the company but this report is intended to use it internally. The report is provided to the business managers, which is used by them to make prospective business decisions. Management accounting involves the use of various statistical tools and techniques to present the data. Management accounting mainly focuses on the interpretation of trends, making assumptions, and all the qualitative elements of the business.
It is concerned with the process of determining the tax liabilities of a company. In the case of the UAE, the only tax which is applicable is VAT, and under this accounting practice, the accountants ensure whether the company complies with all the tax laws and they help the company to pay the respected tax on time without delay. They protect the companies from penalties and fines due to delay or non-payment of tax.
Chartered accountant is a member of professional accounting body. The professional accountants in Dubai are skilled enough to work in a number of areas including management to auditing. They usually, focus on any particular specialization within the accounting field.
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