Preparing financial statements accurately is a crucial requirement for firms undergoing an external audit in Dubai. However, most entrepreneurs lack knowledge about the main parts of the financial statement, and they completely rely on their accountant to prepare it. Understanding financial statements will help you to prepare well for the external audit and help the auditors during the audit procedure.
With this, audit firms in Dubai will help you to know the notes to the financial statements. Keep reading.
What Are Notes To The Financial Statements?
While auditing, audit firms in Dubai will thoroughly investigate the information on the financial statement, including the notes to the financial statement of a company.
Notes to the financial statements are supplemental notes in the published financial statement of a company. The notes are about the assumptions used to prepare the numbers and the accounting policies used by the company to prepare the financial statements.
Such notes help the investors, stakeholders, and analysts to interpret the numbers in the financial statements. Auditors use notes to the financial statements to determine if the accounting policies used are properly applied and appropriate. The notes can be used to understand the issues connected to the financial condition of the company. Apart from the financial statement numbers, auditors use the notes to the financial statements to base their audit opinion fair.
Composition Of Financial Statement Notes
Notes to the financial statements are made of the following common items:
- Basis Of Presentation
This is the first section of the notes of financial statements that describes the basis of presenting and preparing the financial statements.
- Accounting Policies
In this part, we get information about the accounting policies used by the management to prepare financial statements. Providing information about the accounting policies helps the auditors get familiarized with the financial statements better.
This part discloses some key aspects such as the depreciation method used, accounting for intangibles, and how the company values inventory. You are needed to disclose all the accounting policies adopted in the financial statements.
- Depreciation Of Assets
Depreciation of assets is described as the value of a fixed asset over time as a result of normal tear and wear. The notes to the financial statements have a section for the depreciation of assets, which informs us about the methods used by the firm for the depreciation of assets.
We may consider the depreciation method adopted by the management, we may see considerable fluctuation between the value reported on the balance sheet and net income in the income statement. By reading the information on this method, the auditors or other users can know the differences in net income in the income statement and the value in the balance sheet. By reading the information on this method, the auditors or other users can know the differences in net income in the financial statements.
Hire The Best Audit Firms In Dubai, UAE
Companies add notes to the financial statements to make key disclosures that inform about the assumptions used to prepare the financial statement. Your audit will be successful if you have leading auditing firms such as ebs.
ebs likewise offer services, such as accounting and bookkeeping services, VAT services, Auditing, Due Diligence audit services, and many more.
Feel free to contact us with any additional inquiries or requests for accounting services. A free discussion will be given to you by our specialists, who will answer your request immediately.