Financial records are continuously preserved for accounting purposes since a business runs on its fixed assets. It is important to understand the audit methods needed to verify these assets. If these audit methods are not followed, they could compromise good financial management and government. Therefore, every company in Dubai needs to conduct an annual audit of its fixed assets.
The audit is done to make sure that all assets are in good condition and maintained. Companies in Dubai conduct an audit to track any depreciation that has taken place over the year. Moreover, audit firms in Dubai find out the weaknesses and flaws and immediately report them to your management. These audit firms conduct audits of fixed assets to ensure they are properly accounted for in the financial statements.
These are some of the most important procedures that need to be followed to audit fixed assets in Dubai:
- Verify the conditions and existence of all assets
- Prepare a list of all fixed assets and their approximate value
- Track any depreciation that has occurred over the year
What is a fixed asset?
Are you wondering about what a fixed asset is? Well, a tangible asset purchased for use in a company’s operations to produce revenue is known as a fixed asset. Also, it includes a wide range of assets held by companies, like real estate, plants, buildings, vehicles, tools, machinery, stock, and office supplies. As a result, the process for certifying fixed assets might change and is dependent on the particular item.
What is the purpose of auditing fixed assets?
It also serves as a way to verify the condition and the existence and condition of the fixed assets, as well as to assess their value.
Auditing fixed assets is a crucial process that helps to ensure the completeness and accuracy of the organization’s financial statements.
The audit helps to identify any irregularities or fraudulent activities related to the fixed assets. It ensures the legality and accuracy of fixed assets.
Audit procedures to verify fixed assets in Dubai
Companies must ensure that they have appointed skilled professionals to carry out different audits. It will assist in maintaining your company at a top level of quality and productivity. This can be achieved through different processes and one such important one is preparing a final audit report.
Before continuing any type of process, you need appropriate documentation to prove the worthiness of your company. Also, the documents prove your credentials, they should have proper evidence to prove your reputation and record.
The report should include any new findings made when carrying out the analysis. Also, it provides complete news of the business future and operations implications of any change. To prepare the audit fixed assets in Dubai, you will need to follow these procedures:
Reviewing the supporting documentation
The step in conducting an audit of fixed assets is to see the supporting documentation, such as purchase orders, receipts, and invoices. Moreover, this documentation should be reviewed to ensure that the assets are properly recorded in the accounting records.
Observing the physical inventory of the fixed assets
The auditor will observe the physical inventory of the fixed assets. It ensures that the assets exist and are in the condition that is in the financial statements. Auditors will request evidence of an asset’s existence like invoices, purchase orders, and contracts. Also, they will also see the assets being used in the business, such as usage reports and maintenance records. For some assets, such as buildings and land, the auditor may also want to carry out a physical inspection.
Testing the controls
The auditor will test the controls that are in place to ensure that the assets are properly accounted for. This includes testing things like authorization procedures and physical security controls.
Once the auditor has gathered all the evidence, they will then assess whether the asset is properly recorded in the financial statements.
Audit reports
Audit reports are very important in companies because they give information about the performance of various aspects like marketing, sales, and legal issues. You need this report to show how effective the department is. Moreover, this shows what is expected from the employees and the results of the different tasks. It also gives the insights that are needed to enhance the effectiveness and efficiency of the firm. Additionally, these reports from part of the audit planning as well as the provision of a detailed analysis of the financial condition of the company.
Conclusion
Auditing fixed assets plays a critical role in maintaining the financial health and integrity of any company in Dubai. Following the outlined procedures, from meticulous documentation review to physical inventory observation, ensures both compliance with regulations and accurate representation of these vital assets in your financial statements.
You might be wondering how ebs can help with the process. The answer is we provide advice and assistance to ensure that the audit is conducted accurately, and all the necessary information is gathered. Here are some important tips to know.
Technology Integration: Consider leveraging asset management software to streamline audit processes and gain real-time insights into your fixed asset portfolio.
Regular Reviews: Don’t limit audits to yearly occurrences. Implement periodic reviews to maintain consistency and address any emerging issues promptly.
Continuous Improvement: Stay informed about evolving auditing standards and industry best practices to continuously refine your fixed asset management system.
ebs provide other services such as 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
How do you conduct fixed asset verification in UAE?
There are a few steps to follow for fixed asset verification in UAE:
- Review supporting documents
- Observe physical inventory
- Test internal controls
- Prepare an audit report
How do I verify an asset register in UAE?
Follow these steps to verify the asset register:
- Cross-reference register with supporting documents
- Perform physical counts
- Investigate discrepancies
- Update the register
Is physical verification of fixed assets mandatory in UAE?
No, physical verification is not explicitly mandated by law. However, it’s crucial for maintaining accurate financial records and complying with audit standards.