An external audit is an investigation and analysis of the financial position of a business conducted by an auditing firm that is not related to the business being audited. This process usually begins with analyzing a company's accounting records to determine the accuracy of the calculations and the recording process used. One of the purposes of this study is to verify that the accounting practices of a company are valid and comply with generally accepted accounting standards. The auditor's interpretation of the corporate account is compared to the financial statements to determine whether the corporate account accurately reflects the financial and overall financial health of the entity.
Reasons for an external audit: In many cases, external audits are required by business owners as a form of business management oversight. This is especially true in large enterprises where ownership and control are segregated. Owners/shareholders want to ensure that their management is competent and that their investments in their companies are safe. In other cases, external audits are required by governments or government agencies for businesses of a certain size or larger. The main purpose of government-required external audits is to identify business fraud. In Dubai and other Emirates in the UAE, companies must use an accounting firm approved by the authorities.
Audit Company Responsibilities: External audits may be performed by individual auditors, but audits are more often performed by auditing firms that specialize in external audits. For audits required by government law, the auditor's qualifications are usually specified in the bylaws. In the UAE, auditors from Dubai and other Emirates must be approved. External audits are often required by an organization's business plan or corporate charter. The auditor's qualifications are usually indicated when presenting the audit.
The United Arab Emirates has required audited financial statements since 1984, and Federal Law No. 8 has been passed for commercial enterprises. External audits conducted by Dubai and other UAE auditors meet this requirement and protect the company from imminent fines or other penalties. Penalties have been stipulated in a new federal law on commercial companies passed in 2013.
UAE External Audit Free Trade Area Requirements: United Arab Emirates authorities require audited financial statements as part of the license renewal process. Free Zone authorities always require an audited annual account for license renewals. Once your audit report is ready, renewing your license is quick and relatively easy.
Bank and financial institution requirements for external audits: When asked for credit approval, most UAE banks require audited financial statements to determine a company's creditworthiness. The same requirements must be met for the approval of most other banking facilities.
The main purpose of external audits in the United Arab Emirates or elsewhere is to rely on the company's financial reporting. This brings some important but intangible benefits to all business owners and top managers. In the United Arab Emirates, these intangible interests apply equally. One of these benefits is that audited financial statements can be important evidence in proceedings involving a company. Another benefit is that audits help stakeholders accept the credibility of a company's financial statements.
Independent external auditors are legally required to be completely independent of the audited company. There are rules that prohibit examiners from being involved in the examination results. The auditor should not invest in the audited company. There are several national and international organizations that provide certification for auditors and accounting firms (the SEC, PCAOB, and AICPA, as in the United States, serve this purpose). These professional associations set out standards of auditor independence and provide training to auditors. There are several organizations that provide monitoring capabilities through the auditor. In order to maintain a license or accreditation as an auditor, individual auditors and auditing companies must maintain both the appearance and the facts of independence. Questions about the auditor's independence can be investigated and the license or authorization can be revoked. When a stakeholder reviews an auditor's certification in an audit, that stakeholder is encouraged to trust the auditor's work.
UAE authorities require audited financial statements as part of the license renewal process. Free Zone authorities always require an audited annual account for license renewals. The audited annual financial statements indicate to the authorities that the company is performing the activities permitted by the business license and not performing the activities not permitted. Reliable audited financial statements help authorities find an illegal or inappropriate activity, and audits encourage companies to avoid illegal activity. Once your audit report is ready, renewing your license is quick and relatively easy.
Most UAE banks require audited financial statements to determine a company's creditworthiness when asked for credit approval. The same requirements must be met for the approval of most other banking facilities.
The world's best companies are looking forward to expanding their operations in the United Arab Emirates! There are so many opportunities here that multinational companies are lining up, waiting to find opportunities to enter the market. They realize a level playing field when they see one.
Every business is looking for an advantage over its competitors - that's for sure - but that should never happen because the laws apply differently in each case.
In the UAE, all companies follow the same rules, and one of the most important is the storage, reporting and auditing of financial records.
Any company that wishes to do business in the UAE is subject to an annual external audit of its financial records by one of the qualified auditing firms in Dubai or any of the UAE emirates is different. The rationale behind this is that it maintains transparency and ensures compliance with applicable regulations. An audit of your financial statements is important not only because of legal requirements but also because it requires independent control over the company's operations as well as its employees. We have all seen billions of dollars worth of companies liquidated due to embezzlement in financial records. One way or another, one of the main reasons for this liquidation is the lack of financial audit or fraudulent audit of the accounts. It is therefore essential not only to audit your accounts regularly but also to ensure that you partner with the best auditing firms to avoid fraudulent audits.
In short, an audit becomes mandatory for the following reasons:
Nadeem & Umendra Chartered Accountants, a leading auditing firm in Dubai with over two decades of experience in audit and service assurance audit. We have covered all areas of our audit. We are registered with all banks, government agencies, RERA (Real Estate Regulatory Authority), as well as all free zone authorities.
This means that we can provide all necessary services, to the widest range of clients possible, for all their external audit requirements.
Here are some of the most common auditing and consulting tasks we perform on a regular basis for domestic and international clients:
It involves the review of an entity's financial statements by an independent third party. It is usually done by companies for legal reasons. However, a company that is not required by law or regulation to audit its financial statements may still perform an audit to assure related parties that the information presented in its financial statements company that is trustworthy and expressed honestly. In addition, UAE banks require audited financial statements from licensed auditing firms based in Abu Dhabi, Sharjah, or mainly Dubai audit firms prior to granting/renewal of the facility. banking facilities for their customers.
We have clients from all possible industries. Whether it's banking, complex manufacturing, commerce, aviation, entertainment, or construction, we exceed our customers' expectations and you'll be impressed too.