Organizations, no matter public or private, always keep an eye on their financial assets. It is essential for monetary decision making. In this regard, audits help identify sensitive areas of financial matters, including cash holdings, control policies for internal audits, and accounting record analysis. So, the companies should learn to perform audits effectively for eliminating mistakes and errors in financial statements.
Nevertheless, auditing is the most important process for companies because it enables them to achieve their corporate goals and objectives with financial decision making. Keep the latest UAE tax modifications in mind; it is safe to say that auditing help companies avoid penalties through accuracy and transparency. Let’s consider it in a bit more detail – keep reading!
What Is a Financial Audit?
In the simplest word, it is the investigation of financial records maintained by any business. The process involved plenty of steps to monitor and analyze the accounting documents and financial statements annually to assess the company’s assets management. It is generally done by the external auditors appointed by the governments to ensure a fool-proof record of the company’s financial position in the market.
So, the companies should stay prepared for such an evaluation to get through the process successfully without any inconvenience. For this purpose, businesses heavily rely on the services of top audit firms in Dubai for internal analysis of the financial sheets and accounting journals. It assists in eliminating errors and improving the quality of the monetary statistics.
Still, it is imperative that companies should have a proper understanding of conducting audits internally to stay at a bay from a lack of knowledge and inspection problems. So, let’s move forward towards the essential phases of financial analysis.
Essential steps to perform financial audits in business
There is no denying that dealing with financial matters is tricky, owing to the involvement of complexity. However, every business owners have to deal with it wisely as a slight mistake can have a bigger impact when it comes to financial matters.
If you are running a business in the UAE or any other part of the world and it seems difficult to prepare for the internal audit – here is your guide!
Assessment of Internal Reporting procedures
The financial detail of the company should be recorded properly before the audit process starts. For this reason, the companies maintain a proper system of financial reporting for tracking their monetary tasks and activities.
It is essential to create a system as soon as possible to keep everything starting from invoices, documents, bank statements, and other necessary stuff to ensure transparency. At this step, the auditors analyze the created system of internal reporting for considering the accuracy of records for ensuring compliance with the accounting cycle in the company.
Analysis of Data Storage Methods
Once the analysis of procedures used for financial reporting is done, the professionals then move to the assessment of methods used for information storage and retrieval. At this stage, the sole focus in to determine the quality of procedures used for keeping the facts and figures for a company.
Additionally, the electronic record of financial transactions is compared with the manual data to evaluate the redundancy and accuracy of the information. Then, the process used for accounting is also reviewed for information processing.
Threat Estimation of Risks and Frauds
It is imperative to understand that risks are the uninvited guests in financial matters. The step is significantly important for success in the external audits at the end of a corporate financial year. The companies should be proactive in eliminating risks of frauds from their financial data through proper checks and audits. So, the companies consider estimating the presence of such probabilities in their data assets related to financial accounting for investigating information leakage or mismanagement of assets.
Comparison of External and Internal Records
It is noteworthy to state that the scope of internal audit should not reach above the process of external auditing. Therefore, the companies need to maintain a standardized level of within-the organization analysis according to the requirements. This can be done with the help of a comparative assessment of internal and external audit stages to make compatibility among them. At this step, the experts checked for the statistics listed in the internal statements of cash holdings and compared them with the financial performance reports of external audits.
Examination of Tax Records and Returns
The tax timeframe for every company is predefined by the state tax authorities. So, the companies should comply with the laws and regulations by maintaining a record of tax returns. The auditors consider the records for analyzing the transparency of data provided by the company.
For this purpose, the statements of tax paid records are evaluated comprehensively in reference to annual expenditures and profitability. No doubt, tax processes and assessments are tricky tasks to accomplish, but you can make it easy with the help of top audit firms in Dubai. It is because professionals know the industry standards for the identification of loopholes in your financial data. Eliminate the risks in tax examination with expertise.
Financial auditing is complicated but compulsory!
Summing up, the companies should maintain transparency in the financial data by conducting internal audits regularly. For this purpose, the companies can define intervals for evaluation of the accounting records and financial journals to comply with the corporate requirements.
However, it is no doubt a complicated process that requires extensive professional expertise. So, you are unable to perform it yourself; you should rely on audit agents to get the work done without any difficulty. It will help you to get a relaxed breath as you just have to supervise while the professional do the due work for you!
Don’t forget financial audit helps in eliminating the risks and improving your chances of success in the market – adopt a proactive approach towards finance management!