What is an Audit
To understand the benefits of audited financial statements in UAE, first of all let’s understand, what is an audit?
Audit refers to an official inspection of an organization’s financial statements by an independent qualified auditor. The auditor is totally independent from the entity and therefore provides an independent opinion on whether the financial statements are accurate and reliable or not. Since the auditor is independent, his/her opinion is free of bias, self-review and self-interest.
Why Audited Financial Statements are Essential Compliance to Business in UAE
Running a business is making money and growing your brand, but in order to keep the business up and running, company owners should abide by the rules. One of the essential rules in the United Arab Emirates (UAE) is having an audited financial statement. So why is having your financial records put under a microscope so important? Let’s break it down to smaller parts for a better understanding.
An Overview of Audited Financial Statements in UAE
An audited financial statement is essentially a health check for your business. A meticulous examination of your company’s financial activities, conducted by authorized auditors, to make sure your numbers and operations matchup as per the law.
Particularly with the UAE’s Commercial Companies Law, Federal Law No. 2 of 2015, specifically in Article 27, Chapter 2, companies are required to engage the services of licensed auditors, registered under the Ministry of Economy in the UAE. The books of accounts which should be maintained for five years, in the presence of doing the annual audit should be kept in hand.
While external audits are compulsory for UAE public sector companies and most free zone authorities, it’s often optional for mainland companies. Regardless, having a trusty auditor by your side is like having a compass in a desert – they give you insights into your business scenario.
Benefits of Audited Financial Statements
We all know small and medium-sized enterprises (SMEs) are the lifeblood of UAE’s economy. But often, they are not immune to financial challenges. Having a financial audit is like having a bulletproof shield against these economic obstacles.
Audited financial statements are proactive problem solvers. They optimize your business processes and give stakeholders or potential investors a window into your business’s financial health.
Think of professional auditors as your business growth partners. They pinpoint opportunities for speedy progress. Without regular financial audits, potentially fraudulent activities may go undetected. Mitigating the risk of errors and fraud is necessary particularly because a single mistake in financial records can lead you down the rabbit hole. Accurate financial statements help businesses make decisions that are like a GPS directing you towards safe and successful paths.
The Audit provides reasonable assurance to the internal stakeholders like the Board and Shareholders that the financial statements of the entity present a fair state of its financial affairs.
The Audit also provides multiple benefits to external stakeholders like government entities, new investors and sellers, etc., e.g. it provides peace of mind to the investors in terms of relying on the financial statements of the entity they are investing in. Another example would be if your business is thinking of seeking a bank loan, with the audited financials your entity would have a better chance at securing the loan.
So, audited financial statements are not just to abide by the rules, they also help make strong businesses. Companies that prioritize annual financial audits essentially bulletproof themselves for long-term success in the competitive UAE business landscape.
External Audit Requirements in the UAE
External auditors in Dubai, for instance, assure the alignment of your company’s financial statement with local and international standard operating procedures. Make sure that your financial information sails smoothly across a sea that is ruled by standards like the IFRS.
Here are some situations in your company that warrant audited financial reports:
● Trade License Renewal
● Regulatory Compliance
● Liquidation
● Branch Operations
● Corporate Tax Compliance
● Bank and Financial Institution Requirements
Audited financial statements work as torchlights in business mazes. They give entrepreneurs a comprehensive understanding of the company’s financial position. Unlike larger enterprises, many small ones may lack the level of accounting expertise. External auditors promise accuracy and compliance with professional accounting standards.
What feels like a drill into your financial records is, in reality, a booster shot for your business. Authorized audits make your financial reports more transparent – like a clear window into your business for stakeholders, investors, and financial institutions.
Rely on the Best Audit Firms in Dubai, UAE
Often, the idea of annual audits may seem daunting. But with trusted audit firms like Adam Global in Dubai, you can sail through this audit sea with ease. Adam Global has a renowned auditing team that provides a myriad of services, such as, VAT Registration, Corporate Tax Returns, Preparation of FS, and any other tax services .
By collaborating with Adam Global, business owners can not only ensure compliance with the law but also adhere to the highest standards of financial governance.
Audited financial statements then are not just an obligation – they’re a friend in disguise, a tool for resilience, and a secret weapon for growth in the UAE’s competitive business landscape. So, are you ready to partner with us and turn compliance into a cornerstone for success?
Disclaimer: Always consult professional accounting or legal services for the most up-to-date guidance specific to your business situation.
