Are you wondering about how to get an audited financial statement? Navigating the financial intricacies of UAE can feel daunting. However, the best way is to complete the audited financial statement. Audit is very important for any company in UAE and many have constrained working narratives about it. Moreover, your auditors are required to get a great deal of data to finish the audit, including accurate audited financial statements. In this blog, we will explore the requirements for financial statements audit. Let’s get into the blog.
Challenges in preparing audit financial statements
Preparing compliant and accurate audit financial statements can be a complex process for any business. Moreover, there are specific challenges that businesses operating in the UAE face. Here are the most common challenges faced by many businesses.
- Navigating a New Tax Landscape
- Record-keeping and Documentation
- Internal Control Weaknesses
- Finding Qualified Personnel
- Interpreting Accounting Standards
So, the introduction of the corporate tax is a new layer of financial reporting. Businesses need to adapt their processes and accounting needs to comply with the new tax law. Also, this can be time-consuming if not done properly. It is important to understand the interplay between tax rules and accounting standards and it can be confusing.
Maintaining comprehensive and accurate financial records is crucial for audit preparation. However, businesses can still face challenges because of a lack of standardized record-keeping practices.
If you have ineffective internal control, then it can increase the risk of errors in financial statements.
Locating skilled and experienced accountants in the UAE can be challenging, especially for smaller businesses. Also, the introduction of corporate tax has only increased the demand for qualified professionals.
It can be complex to apply International Financial Reporting Standards (IFRS) for smaller businesses. Consequently, it can be challenging to interpret the guidance.
What to prepare for audit financial statements?
You require these four things to prepare your audit financial statement.
- General statement
- Trail balance
- Copies of leases, advances, and material contracts
- Loan explanation
General Statement
Most new businesses use accounting software such as QuickBooks. You can add your general statement to Excel. Also, you can send a reinforcement duplicate of your QuickBooks to the auditors. The general statement gives the idea to your auditor about the measure of movement they have to further audit.
Trail balance
Auditors like your preliminary equalization. Budget reports are more than just a colorful display of numbers. However, these are carefully constructed narratives of your business’s financial journey. And here lies a crucial chapter, the preliminary equalization. This statement, often generated through accounting software like QuickBooks, serves as the foundation for verifying the accuracy. Also, it verifies the completeness of your financial records.
Copies of leases, advances, and material contracts
Auditors verify the accuracy of lease payments recorded and ensure proper accounting treatment for leased assets. Furthermore, copies of advance payments assist auditors in verifying their existence and proper classification in the financial statements. Also, the copies of contracts enable auditors to assess potential risks and liabilities associated with these contracts.
Loan explanation
Auditors require the loan explanation to verify existence and completeness. The explanation provides details about the loans taken by the company, including the lenders, amounts, interest rates, and repayment terms. Also, the explanation helps in the classification and valuation of the loans. This includes ensuring the loan amount recorded matches the actual amount received and that any accrued interest is correctly reflected.
The process of assembling documents for an audit
Document and assemble all your business statements. You have to confirm that these are entered accurately. A well-organized and efficient document processing system is crucial for a successful audit. It ensures you can access, analyze, and interpret relevant information accurately and efficiently.
Conclusion
It can be daunting to obtain an audited financial statement. Especially with the complexities of UAE’s evolving tax landscape. However, navigating the challenges of record-keeping, personnel, internal controls, and accounting standards is essential for businesses operating in the region.
Understand that a successful audit is on being prepared and transparent. Also, by properly understanding international reporting standards, maintaining accurate financial records, and gathering the necessary documents, you can set yourself up for a smooth and successful audit process.
Invest in professional help if needed, as qualified accountants can assist with tax regularities and IFRS interpretation. Ultimately, a clean audit report not only reassures stakeholders but also strengthens your credibility and opens doors to future opportunities in the UAE’s dynamic market. ebs can be your first choice for the transparent audit in UAE. ebs has the best auditor to make your financial statements transparent in UAE. We provide catered services according to the client’s requirements.
Our services include accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. So, you should get in touch with our experts to discuss our services and contact us today.
FAQs
Is financial audit mandatory in UAE?
As per the law in UAE, all companies are required to keep their books of accounts for a period of 5 years. Moreover, they have to maintain the annual audit and keep the records in hand.
Who can audit a company in UAE?
Companies in UAE must be audited by independent, licensed audit firms registered with the Ministry of Economy and other relevant authorities. Also, these firms employ qualified auditors meeting specific experience, education, and exam requirements.
What is the audit process in UAE?
The process involves the thorough examination of the financial statements, supporting documents, and tax declarations by the FTA. Moreover, the audit process aims to verify the completeness and accuracy of the reported information.