After establishing as a registered company, it’s essential to file annual financial statements accompanied and attested with an auditor’s report. According to the commercial companies Law, an audit of accounts is necessary for all the businesses in UAE.
What is a financial statement audit?
A financial statement audit is the independent examination of a company’s financial statements and its concerning disclosures by auditors. This provides a true and fair view of the company’s financial performance. The auditor’s report is accompanied by financial statements when they are issued to the recipients.
What is the purpose of financial statement audits?
A & A associate supports your company’s financial statement audit by adding credibility to the reported financial position and performance of the business.
Security and exchange commission requires that all publicly registered companies must file annual reports for audit. Similarly, lenders require financial statements to which they lend funds. In other case, suppliers also require financial statements before they are willing to extend their trade credit.
What are the objectives of financial statement audits?
- This enables the auditor to express an opinion on the company’s financial statements prepared by the management.
- It’s essential that all the financial statements are prepared as per the recognized accounting policies and relevant statutory requirements. It’s significant that the report should disclose all material matters.
What are the different phases of a financial statement audit?
Planning and risk assessment:
We do a methodical planning of how to carry out the audit by gaining an in-depth understanding of the business and its environment.
Initially, we analyze and evaluate the risk of misstatements in the financial report. The audit procedure is completely customized based on the organization and its needs. In the case of high-risk, rigorous accounting procedures shall be applied and in case of low risk, we have lenient audit procedures.
Internal controls testing:
Internal control is basically the second phase of a financial statement audit. It refers to the set of activities and procedures integrated into the system to avoid fraud data in relation to the transactions and assets. Segregation of duties, authorization process and safeguarding of assets is the main concern in internal controls. In case of strong internal control, audit turns out less lengthy and detailed whereas a weak internal control systems would require diligent audit procedures.
According to the planning and risk assessment, substantive procedures will be performed for each line item booked on financial statements or disclosed in the notes to accounts.
Our services at A& A associate would include the following few procedures as well as others as per your business needs:
- Cash – Review of bank statements, petty cash, count of on-hand cash, interviewing the cashier, bank confirmations, and review of bank reconciliation statement.
- Accounts receivable – End balance check, reconciliation statements, negative and positive confirmations, testing of cut-off procedures and yearend sale.
- Inventory – Physical stock count, examination of supplier invoices, testing of cut-off, receiving and shipping procedures, obtaining confirmation of inventory list at other locations, testing of computation of allocated overhead etc.
- Accounts payable – test cut-off procedures and confirm the balance.
- Assets – Observation of assets, authorization of purchase and disposal, recalculation of depreciation and amortization, testing for impairment and verification of market value.
- Revenue – Review of sales invoices, sending negative or positive confirmations to customers, review subsequent transactions including sales returns or abnormal cash discounts or abnormally high prices.
- Expenses – Evaluate and review the bills or any subsequent transactions.
What is the importance of financial statement audits?
- Enhance the quality of the business process
A rigorous audit process identifies the areas where the company’s management can improve its controls on processes. This further adds value to the company by enhancing the quality of its business process.
- Assurance to the investors
A financial statement audit provides a high level of assurance that the amounts included in the statement and disclosures are free from any material misstatement.
- True and fair view
The statement provides a true and fair view of the company’s finance in all material aspects. It’s generally in accordance with the accounting principles.
- Enhance consistency
The audit provides a level of consistency in financial reports while analyzing different companies and decision making.
A & A associate focus on the basic principles governing a financial statement audit,
- We focus on integrity giving a fair and honest report.
- We maintain the confidentiality of the information and don’t disclose such information to a third party.
- Exhibit the right skill and competence with adequate training.
- We plan and conduct an audit in an effective and timely manner.
Apart from the above listed; we adhere to the audit standards and assure complete support to our clients!!