Dubai has one of the fastest-growing business hubs in the world. Due to numerous business opportunities, it attracts millions of companies every year. However, setting up a business in the UAE is relatively easy, but it requires due diligence and a lot of work to manage the finances.
In this struggle, most entrepreneurs overlook the financial audit of the company and consider it unnecessary, which results in detrimental effects later on. Small businesses are responsible for following financial regulations and laws. Therefore, a financial audit can help companies to ensure that their assets are obtained ethically and are being used efficiently.
Necessary Financial Audit Procedures for SMEs in the UAE
Just like large organizations, small businesses also need a regular financial audit to ensure the transparency of financial statements and cash flow. Here are top financial audit procedures for all SMEs in the UAE:
1. Document and Records Verification
In this procedure, the audit firm analyses all the financial records and statements kept by the company. These documents include invoices, receipts, financial statements, account books, etc. As small businesses don’t have extensive records, auditors from an accounting firm easily go through all these documents to check the accuracy of the data.
2. Recalculation Procedure
This is the most common procedure used by the auditors in Dubai, UAE because it is highly reliable. In this procedure, the auditor recalculates all the figures mentioned in the financial documents and accounting books of the firm. They make sure there are no false figures, and all the end results are accurate.
This procedure is highly important for tax purposes, so make sure to consult one of the top audit firms in Dubai, to correct your financial books. Failing to do so will lead to administrative penalties later during the tax season.
3. Meeting Reviews
Financial auditors from a reputable auditing firm in the UAE will not only help you with finances but also the management of the business. In this procedure, the auditor sits through meetings and tries to identify the issues discussed that might affect your performance. They also make sure that the company is implementing the solutions presented in the meeting for potential problems.
4. Reviewing Accounting Records
In this financial auditing procedure, the auditor scans and analyses all the accounting records to look for miscalculation or any other error (entries and omissions). Every single data entry is analyzed to minimize problems in the future. The auditor also scans records to identify any illegal activity/ credits or unauthorized debits.
5. Recording Tangible Assets
All companies, regardless of their size, keep an inventory list that records all tangible assets that it owns. In this procedure, the auditor compares the list of assets with the physical assets to make sure these items actually exist in the company and is not a fraud. It also includes details like age and physical condition of the asset to make sure the data is not false.
Why Financial Audit is Important for Small Businesses
Small companies are no different from large corporations when it comes to financial risk management. A financial audit can save SMEs from several problems and issues. The following are some of the reasons why small businesses need an annual financial audit.
i. Identifying Problems
A good audit firm will help you identify different problems and risk areas in your company through its financial statements. This way, the company can quickly get rid of these problems in the future.
ii. Identifying Weaknesses
Small businesses are vulnerable; thus, they have multiple weaknesses and are prone to financial damage. By getting the help of one of the top audit firms in Dubai, you can identify weaknesses in your company, and these experts can make suggestions to improve your financial stability.
iii. More Internal Control
Auditors give companies advice on business practices, which helps owners to run their companies in an effective manner. By conducting an audit, you get to know your business inside out, which leads to better internal control and reducing fraud risk.
iv. Prevention of Frauds
One of the biggest threats faced by the corporate world is a fraud, as it can severely harm your company. The audit firms in UAE prevent all types of fraud within a company that may damage their reputation and finances.
Financial Audit Report is Vital for your Business Stability!
Regardless of the size of the business, each company and organization must conduct an annual financial audit. Hiring an experienced audit firm in the UAE can give small businesses a lot of benefits, as expressed above. A financial audit will provide you with correct data and statements which will show where your company stands.
Remember! A thorough financial evaluation enables businesses to focus more on business growth and grasping new opportunities. So, don’t forget to ensure regular financial audit to protect your business against harm.