Standard Auditing Process

audit firms in dubai

Auditing Process 

Auditors have a very important job. They help firms assess internal guidelines and policies, evaluate operating performance, and determine whether the policies are in line with the regulatory procedures and requirements. Aside from that, they also evaluate financial reporting process and accounting tools and systems as a way to determine whether the financial statements are accurate or not. 

With that, certain auditing processes should be taken into consideration. These are:

* Review the operating environment

* Internal controls testing

* Account testing and detailed balance

* Analytical procedures

* Risk assessment

Review the Operating Environment

An auditor’s job is to evaluate the business entity’s operating environment. This would allow him to determine the crucial factors that affect the operations. This could range from internal to external, and short to long-term factors. Likewise, an audit specialist should also review the organization’s activities and ensure that most of these are legal and comply with the regulatory rules set by the government. For external factors, this could be comprised of the governmental mandates, business practices, industry trends, as well as economic sector outlooks. On the other hand, internal elements that could have an impact on the company’s activities could be senior management’s leadership ethics, style, human resource procedures, and safety policies or occupational health.

Internal Controls Testing

Auditors should also review the firm’s policies, procedures, and internal control. Aside from that, they should also evaluate the operating performance, detect risk trends, and determine the human resource guideline. They must use the operational knowledge in order to evaluate the efficiency and the control designs. Controls are specifically and adequately designed if goals, decision-making processes, and step-by-step procedures are clearly presented. This is considered to be very important, because effective controls could prevent the occurrence of mistakes and flaws for which they are designed. With that, auditors are tasked to focus on controls in “high-risk” areas and cooperate with segment managers as a way to correct the deficiencies detected. For example, an auditor could review the plant’s safety handbook, assess detailed step-by-step procedures and give an advice to the management, asking him to modify the procedures, because they don’t follow the regulatory guidelines one must comply with.

Account Testing and Detailed Balance

An auditor’s job is to give extra attention to detail on balances and accounts. They should monitor if the operating procedures and controls are either weak or high. Whatever the findings may be, they should report these financial statements, especially if it seems to be inaccurate. Aside from that, they could also focus on the income statement key accounts or balance sheet instead. This could be expenses, sales, accounts receivable, accounts payable, and cash. The balance sheet is a type of financial statement that presents the firm’s debts, assets, and owner’s equity at the end of each quarter. Furthermore, the income statement should also present the firm’s revenues and loses periodically. For instance, an auditor should review the details of a firm’s revenue account in order to verify if the sales and customer discounts are accurately recorded, without any discrepancies.

Analytical Procedures

Analytical procedures help the auditors in determining and confirming the relationship between balances or financial statement accounts, compare current and historical data, assess key operating trends, and assess accuracy in financial reporting. Additionally, auditors should also ensure that the financial information is thoroughly prepared and reported professionally in accordance with accounting principles, as well as regulatory guidelines generally accepted in industries in which the organization is currently operating. For instance, an auditor should know that receivables, sales, and non-collectable accounts in the balance sheet are linked to each other. Then, he should verify whether these sales revenues, excluding the discounts, are really consistent with the non-collectable amounts as well as the customer receivables.

Risk Assessment

Auditors evaluate if the business is at risk, through reviewing the internal controls, guidelines, internal policies, and deter risk trends in a firm’s segment. They’re tasked to work in accounting, risk management, and even in the corporate finance departments in order to evaluate the risks and exposures across activities and business lines like operational and financial risks. Keep in mind, the financial risks are always market-and credit-related. This risk is associated to losses incurred because of price fluctuations in securities markets, and business partners because of bankruptcies. On the other hand, operational risk is comprised of information systems, reputation, regulatory and legal risks. The auditor should evaluate the firm’s risk profiles and delegate “low,” “medium,” and “high” ratings of areas evaluated and designate testing resources.

Looking For The Top Auditors in Dubai ?

Alya Auditors provides all kinds of Auditing including Forensic Auditing & Accounting,Due Diligence Auditing ,Statutory Auditing & Concurrent Auditing. Alya Auditors provide all services for clients in DMCC and all other free zones. Alya also combines the use of advanced software with the guidance of accounting professionals. We provide professional services in the field of Auditing, Accounting, Company Formation & VAT Consultation etc.Our customers benefit from a team of trusted, in-house experts ready to meet your accounting needs.

Our powerful software integrates with a variety of accounting software partners, such as  Xero,Tally and Quickbooks, to automate monthly reports and free you to focus on the success and expansion that you strive for with your small business.

When you are ready to hand off the chore of accounting and focus on the business you love, Alya is your financial headquarters. We have powerful software that can save you time and money to get started today.

Benefits of Due Diligence

Due Diligence Audit in UAE ,Dubai

THE BENEFITS OF DUE DILIGENCE FOR UAE COMPANIES

Due to the increased risk of corruption internationally, it’s important to conduct due diligence checks on a global scale.

As a result of due diligence, UAE companies can:

  • gain insight into customers, employees and vendors
  • minimise the exposure to reputational, financial and regulatory risks
  • increase productivity and profitability
  • improve decision-making

THE DUE DILIGENCE PROCESSES

Although the due diligence process will vary from industry to industry, in the event of a potential sale, acquisition or new trading partner, documentation and information will be requested for verification and assessment.

Typical due diligence checks include:

  • Legal due diligence

This assesses the potential legal risks of a business transaction and involves the review of any contracts, loans, securities, intellectual property, and pending litigation involved in the transaction. It also includes an analysis and assessment of the potential exposure of the company to corruption, legal and regulatory risk.

  • Operational due diligence

This considers the operations of the company in order to assess the risks and benefits. It will also assess the viability of any business plans and any associated risks involved, taking into consideration the positioning of the company within the market place.

  • Financial due diligence

In this the financial information and trading performance is assessed. This includes an assessment of earnings, assets, liabilities, cash flow, debt and management, both historically and based on future forecasts.

  • Market due diligence

This involves an evaluation of the current and future potential of the company/trading partner by means of third party information.

  • IT due diligence

This considers whether the IT systems are efficient, cost-effective and secure enough to support an organisation’s growth.

  • Intellectual due diligence

This focuses on the intellectual capital of a company and includes the advantage a company has over its competitors.

  • Human due diligence

This considers the value of a company’s employees in terms of skills, education, experience, creativity, and other social attributes such as willingness to co-operate.

OUTSOURCING DUE DILIGENCE

Given the complex nature of international trading, outsourcing due diligence can be an attractive option for UK companies, especially as they may not have the necessary expertise and resources to conduct it themselves or in-house.

The benefit of outsourcing due diligence is that it can offer access to enhanced global due diligence checks and global compliance monitoring services. It allows individuals and companies to be screened without diverting resources from other areas of the business.

Due diligence is the first opportunity investors have to do a deep dive into a potential merger or acquisition of a target business.

Who Performs Due Diligence Assessments?

Most investors have a competent attorney and CA to perform their legal and financial due diligence. These are assessments of the current legal and financial status of the target and have the principles of law and accounting to guide them. During the legal assessment, a buyer’s attorney will collect all of the outstanding contracts and agreements as well as any outstanding, pending or potential litigation along with all documents that constrain the business. For the financial assessment, the buyer’s accountant will look at the income statement, cash flows and other financial reports in order to verify its past performance. The accountants will look at the financial data for the last 3 to 5 years, depending how diligent the investor is. They’ll commonly ask for independent third-party audits of the target’s financial reports.

Looking For The Top Auditors in Dubai ?

Alya Auditors provides all kinds of Auditing including Forensic Auditing & Accounting,Due Diligence Auditing ,Statutory Auditing & Concurrent Auditing. Alya Auditors provide all services for clients in DMCC and all other free zones. Alya also combines the use of advanced software with the guidance of accounting professionals. We provide professional services in the field of Auditing, Accounting, Company Formation & VAT Consultation etc.Our customers benefit from a team of trusted, in-house experts ready to meet your accounting needs.

Our powerful software integrates with a variety of accounting software partners, such as  Xero,Tally and Quickbooks, to automate monthly reports and free you to focus on the success and expansion that you strive for with your small business.

When you are ready to hand off the chore of accounting and focus on the business you love, Alya is your financial headquarters. We have powerful software that can save you time and money to get started today.

Accounting in Hospitality Industry& Its Benefits

hospitality-accounting-uae

How Accounting Can Help In Hospitality Sector In UAE ?

Hospitality industry is a rapidly expanding business sector in the world. A properly organized accounting system is an essential requirement for any business and hospitality industry is no exception when it comes to this rule.

The UAE hospitality market is expected to reach $7.6 billion by 2022 at a five-year CAGR of 8.5 per cent (2017-2022) and international tourist visits are expected to grow at a five-year CAGR of 4.3 per cent to 25.5 million whereas the hotel supply is expected to grow at a five-year CAGR of 6 per cent to 183,718 hotel rooms, shows Alpen Capital’s latest report on GCC Hospitality Industry 2018.

Every successful venture needs a solid financial management to enable its growth. Take the case of a hotel- accommodating guests, paying the salaries of the hotel employees, reporting the total sales, recording transactions, analyzing the profits etc. require a specialized accounting management. Without that the whole system will be mismanaged and inefficient. That is why accounting is crucial to the hospitality industry. Using the basic principles of accounting, you can get the information required to improve the working of every aspect of your industry. With such useful data available at hand hotel owners can make proactive decisions and improve the profit of their business.

Hospitality accounting includes the following:

  • Preparing a precise collection of month end accounts
  • Budget preparation
  • Business planning
  • Creating financial statements and balance sheets
  • Payroll

Accounting is highly significant to hospitality industry because it enables you to gain deep insights into the financial status of the business. Using the real time reporting of financial activities, you are regularly updated about what is going on with your business. This means you can take better decisions and achieve greater outcomes. It also offers ease of handling as the maintenance of proper records will save you lots of time and effort.

With good accounting practices you will be able to track cash flows and record transactions. This will give you an accurate understanding of how much money was spent, received and exactly where it went. You can plan and allocate resources to separate divisions for efficient run of the business. Proper accounting will give you access to useful information which can assist you in planning and forecasting for future needs. You will be able to serve clients in a better fashion and enhance your returns.

If you own a restaurant or a hotel, you know the tremendous pressure of managing the day-to-day activities of the business. Added to the burden is the need to carry out your financial management. If you choose to do it without seeking professional help, you may be inviting trouble. It not only leads to wastage of your precious time and resources, but your lack of experience and skill will hamper your growth. Expert accounting companies will simplify restaurant accounting and hotel accounting for you. They can help you control cash flows and maximize your earnings. So in order to excel in the dynamic environment of the hospitality industry, good accounting is an essential factor.
Get in touch with Expert Accountants in UAE by clicking this link: Click here

Planning for an exit: Profit and Loss

Exit Strategy

When it comes to selling your business, preparation is everything and it must start years beforehand.

There are a number of key elements that require focus:

  • Establishing the business’ story (history, current standing and prospects)
  • Selecting the right accounting policies
  • Ensuring that your tax position is correct
  • Being ready for due diligence

This paper summarises the accounting policies and raises points that you will need to consider to ensure that your profit and loss account is positioned in the best light.  There are separate article on the balance sheet and related matters and other areas of your business that you should focus on.

Revenue

Revenue recognition tends to be one of the riskiest areas within the accounts and therefore very careful analysis of revenue in regards to: returns, credits, cut-off, warranties, staged-deliveries, staged, retention work, project work, currency exposure and any other special legal terms or rights offered.

Cost of sales

Consider what really are cost of sales and distinguish these as best as possible from administrative costs.  This will ensure that the gross profit margin is being accurately computed.

Salary costs

Ensure that salary costs relating to other areas of the business ie cost of sales, sales or distribution  are allocated to these areas.

Non-trading costs

Ensure that these are clearly distinguished ie share based costs and interest payable.

Depreciation and amortisation

Ensure that these are computed accurately and clearly distinguished.  Potential acquirers often use EBITDA as a proxy measurement of valuation.

Capitalisation

Ensure that your fixed asset capitalisation policy is being applied consistently.  Typically companies will capitalise all assets over a certain value.

Stock

Scrutinise your method of valuation; and ensure that stock takes are regular.

Industry specific accounting policies

Apply them where practical and ensure that the accounting policy sufficiently describes these.

Exceptional costs

Although these are now deemed to be part of the trading costs, there is nothing to stop you including analysis and disclosure to explain the exceptional nature of certain costs.

Full disclosure

More disclosure is better than less.  Information allows potential acquirers to keep track of progress.

Looking For Different Services Under a Roof ?

Alya Auditors is your answer.We offer all kinds of services for a business right from the formation of a business in UAE till its end.All services that we offer are listed below.

Alya’s Services Includes :

  • Auditing
  • Accounting
  • TAX/VAT Consulting
  • CFO Services Business Setup/ Company Formation
  • Liquidation Service
  • Project Analysis
  • Due Diligence Report
  • Forensic Accounting & Auditing

Steps For a Successful Audit

Steps For a Successful Audit in Companies

Steps For a Successful Audit in Companies

An audit is the examination of the financial report of an organisation – as presented in the annual report – by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.

If preparing for your upcoming audit seems daunting, you’re not alone. Many of us feel a sense of dread at fiscal year-end. We’ve compiled our best tips to help you have a smooth audit: 

1. Plan ahead.

Devote additional time both prior to and in connection with year-end close to adequately prepare for the audit, to be available during audit fieldwork, and to communicate with those involved in the audit process. Proper planning and clear expectations will help minimize anxiety and frustration. To be ahead of the curve, treat audit preparation as a year-long process. By keeping schedules and reconciliations up-to-date throughout the year, you can reduce the time it takes to prepare for the audit at the end of the year. Also, maintain an open line of communication between the organization and the external auditors during the year rather than waiting until the audit to discuss new or unusual transactions. This will minimize surprises and allow the organization to make appropriate plans or necessary changes. 

2. Stay up-to-date on accounting standards.

New accounting pronouncements may affect your organization’s audit. You will want to stay up-to-date because you may need to manage or track data in a different way (for example, by updating documentation or reorganizing the chart of accounts) in order to implement new standards. Also, be sure to assess whether accounting personnel require any additional training or information in order to implement the new requirements. To go straight to the source, refer to the Financial Accounting Standards Board’s website, fasb.org, to determine which new accounting pronouncements are effective for the year under audit.

3. Assess changes in activities.

Did the organization start a new program or receive a new grant?  Are there any new reporting requirements? Were any activities discontinued, or were there any impairments?  Were there significant changes in internal control systems? Such changes in activities may trigger accounting and reporting considerations that should be communicated to the auditor during the planning process. 

4. Learn from the past.

Take stock of any prior year audit adjustments, internal control recommendations, or struggles encountered during prior audits. These can be a starting point for self-review and a memory-jogger to insure these issues are not repeated. During the planning meeting with the auditors, discuss what went well during last year’s audit and where there may be opportunities for improvement or more effective communication between the organization and the auditors. 

5. Develop timeline and assign responsibility.

Review the list of workpapers and schedules requested by the auditors, making sure to obtain clarification of requested information when necessary. Assign each item from the list to a responsible person and include a due date. Make sure to allow adequate time for review and correction of schedules if necessary.  Tackle the most difficult, complex, or time-consuming areas first when possible. The drafts of the financial statements, schedules, workpapers or other items requested by the auditor should be available on or before the first day of audit fieldwork. 

6. Organize data.

Create a repository of audit schedules that can be accessed in future years by the appropriate personnel.  Consider creating subfolders for significant transaction cycles or categories, such as cash, revenue and receivables, expenses and payables, investments, fixed assets, debt, etc. to make it easier to manage and retrieve schedules. Schedules and workpapers containing sensitive information, such as payroll, may need to be password-protected or maintained in an appropriately restricted network location. 

7. Ask questions.

If an item requested by the auditor is unclear, ask for clarification prior to the start of fieldwork to avoid potential delays. Auditors are generally happy to answer accounting questions regarding unusual or infrequent transactions the organization may need assistance in accounting for. Also, ask questions of those within the organization to obtain information necessary to prepare required footnote disclosures.  Such discussions could include significant accounting estimates, pending or threatened litigation, related party transactions, commitments and contingencies, and other topics necessary to prepare required footnote disclosures. 

8. Perform a self-review.

Once all year-end closing entries are made, review schedules and workpapers to ensure amounts agree or reconcile to the trial balance. Take a step back and assess the overall financial statements for reasonableness. Also read and update the notes to your financial statements, and refer to a disclosure checklist to make sure you have included all the required information. Be prepared to explain financial statement line item variances from year to year or from budget to actual. 

9. Be available during fieldwork.

Avoid key personnel scheduling time off during the audit, and consider rescheduling or postponing non-critical meetings for finance and accounting staff heavily involved with the audit. Although most of the schedules and workpapers will have been requested by the auditors prior to the start of audit fieldwork, understand that the auditors will be asking for additional information, including supporting documents and explanations, throughout fieldwork. Consider having brief status meetings or obtaining an open items list from the auditors at logical intervals during the engagement to track progress. 

10. Evaluate results.

Maintain communication with the auditors during the time between fieldwork and the issuance of the audit report. If there are any open items at the end of fieldwork, establish agreed upon dates for the information to be provided to the auditors whenever possible. If the auditor is to attend meetings  with the audit or finance committee and/or board of directors, confirm that the auditor has the date, time, meeting location and other pertinent details of the meeting. Consider holding a post-audit closing meeting with employees involved in the audit to communicate results and solicit feedback. 

Looking For The Top Auditors in Dubai ?

Alya Auditors provides all kinds of Auditing including Forensic Auditing & Accounting,Due Diligence Auditing ,Statutory Auditing & Concurrent Auditing. Alya Auditors provide all services for clients in DMCC and all other free zones. Alya also combines the use of advanced software with the guidance of accounting professionals. We provide professional services in the field of Auditing, Accounting, Company Formation & VAT Consultation etc.Our customers benefit from a team of trusted, in-house experts ready to meet your accounting needs.

Our powerful software integrates with a variety of accounting software partners, such as  Xero,Tally and Quickbooks, to automate monthly reports and free you to focus on the success and expansion that you strive for with your small business.

When you are ready to hand off the chore of accounting and focus on the business you love, Alya is your financial headquarters. We have powerful software that can save you time and money to get started today.

Benefits of Statutory Auditing For Companies in UAE

Statutory Auditors in Dubai,UAE

Statutory Audit Benefits For Companies in UAE

Statutory audit, also known as financial audit, is one of the main types of audit which is to be done as per the statutes applicable to the entity and its primary purpose is to gather all relevant information so that the auditor can give his opinion on the true and fair view of the company’s financial position as on the balance sheet date.

  • The purpose of the statutory audit is to Auditor has to give his view independently without being influenced in any manner. He will check the financial records and will give his opinion thereon in the audit report.
  • The statutory audit will help the stakeholders to rely on financial statements. Stakeholders other than shareholders also get benefited from the statutory audit as they can take their call based on the accounts as they are audited and authentic.

Advantages of Statutory Audit

  1. It increases the authenticity and credibility of financial statements as the financial statements of the company are being verified by an independent party i.e., the auditor.
  2. It confirms that management has taken due care while delivering their responsibilities.
  3. It also states regarding the compliance with the non-statutory requirements like corporate governance etc.
  4. The auditor also comments upon the strength of internal control within the organization along with internal checks among the departments or segments. He also suggests the area where internal control is weak and prone to risk. It helps the company to mitigate the risk and results in improvement of the performance of the company.
  5. The financial statement of the small company for whom audit might not be applicable get more values if it is audited one because with the help of the audited financial statements it becomes easier for the companies to get banking loan and other types of facilities on producing of financial statements which are audited by an independent auditor as the audited statements are more reliable and authentic.

Looking For Approved Auditors in Dubai ?

Alya Auditors provide all services for clients in DMCC and all other free zones. We provide all kinds of Auditing including Forensic Auditing & Accounting,Due Diligence Auditing ,Statutory Auditing & Concurrent Auditing. Alya also combines the use of advanced software with the guidance of accounting professionals. We provide professional services in the field of Auditing, Accounting, Company Formation & VAT Consultation etc.Our customers benefit from a team of trusted, in-house experts ready to meet your accounting needs.

Our powerful software integrates with a variety of accounting software partners, such as  Xero,Tally and Quickbooks, to automate monthly reports and free you to focus on the success and expansion that you strive for with your small business.

When you are ready to hand off the chore of accounting and focus on the business you love, Alya is your financial headquarters. We have powerful software that can save you time and money to get started today.