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.

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.

New accounting rules provide no luxury of time

# 1 Audit Firms in Dubai,DMCC

New accounting rules provide no luxury of time

Tougher norms require banks to immediately make it known in their books

The International Financial Reporting Standards (IFRS) issued by the IFRS Foundation and International Accounting Standards Board (IASB) create a global framework for the preparation of financial statements of corporate entities.

IFRS 9 has drastically altered how entities treat their assets, liabilities and profit and loss items. Banks and therefore borrowers will be affected, to an extent that has not been understood by the business community. This column discusses its broad implications and how borrowers will be touched by it.

The most significant difference between the old IAS 39 standards and IFRS 9 is that the latter is forward-looking as opposed to being “past based”. What is at the core of IFRS 9 that will affect borrowers?

Fact vs. forecast

What is germane is that banks will now use a concept called “expected credit loss” (ECL), for every account, using numerous parameters, including qualitative judgements. And will make provisions (for doubtful loans) on a forward-looking, ECL-basis, rather than when loans actually go bad.

It is incontestable that a forward-looking model is fraught with uncertainty as plenty of judgement is required. The historic one is based on fact. IFRS 9 calls for three stages of the performance of any credit. Banks will need to take increasing provisions on their loans, over these. Movement from Stage 1 (ECL from an account over the next 12 months from evaluation or origination point) to Stages 2 and 3 (3 means a loan is “credit impaired”) reflects progressive deterioration in credit quality.

The ECL is determined by a formula, an essential component of which is the “probability of default” (“PD”, determined by historical data etc.). The complexity of this is not relevant.

No time cushion

Suffice it to say that PD will sharply rise with a default, causing ECL to disproportionately surge. Therefore, when even a small default occurs (e.g., a 30-day delay of a small repayment) the bank has to take a provision on the account. Under the old regime, banks could live with delays and latitude in sweeping defaults under the carpet.

No longer. Provisions balloon in stage 2 and are a disaster in stage 3.

There are additional complications. There are a few characteristics of a transaction or credit facility that significantly increase ECL and therefore provision requirements.

First is the transaction structure, comprising several elements. One is the transaction duration — the longer it is, the bigger the impact on ECL in the event of a default. The ECL (therefore provisions) is far higher in case of a two-year loan than a 90-day one.

Second and tied to this is the frequency of repayments of a loan — the higher the frequency, the lower the ECL implication and vice versa. Another is the importance of the sector being lent to. Banks now have to discriminate between sectors and risk-rate each, based on how durable and predictable each is.

Will banks view sectors differently?

The second characteristic is collateral against each credit. Banks now have to be more discerning about various types of collateral and have to rate its quality as well, based on several parameters. Therefore, the scramble for real estate security over the past 3 years is likely to hit a wall, if it hasn’t already.

Third, banks now have to calculate ECL on undrawn but committed credit lines as well, where banks are obligated to keep lines open for a specified time; and not merely on amounts already borrowed. The average borrower need not worry — almost all lines here are uncommitted.

And now, for the icing on the cake.

The UAE Central Bank has set out its own regulations, overlaying IFRS 9, like other regulators elsewhere, resulting in more stringency, and therefore higher provisions (even on current portfolios) for banks. Some examples are: from now on the account classification (at the central bank) of a borrower decided by one lender will affect other lenders.

A downgrade will force others to rework their ECLs. Reports of the Etihad Credit Bureau will now be taken cognisance of.

Multiple boxes to tick

The net widens to include unavailability or inadequacy of financial statements of borrowers; qualified accounts; significant contingent liabilities (most auditors do not even report these!); pending, potentially damaging litigation; key staff leaving the borrower; non-cooperation of a customer in providing information etc, — any of these can spike the ECL.

The canvas is clear, and stark. Lenders will now tightly structure transactions, keep borrowers on tight leashes, monitor all aspects of businesses and use a dizzying array of judgemental tools to evaluate potential risk.

Provisioning will rise and therefore the cost of credit. Credit will be even more judiciously granted, pricing will rise.

For corporates, this is going to be a whole new world, requiring less accounting jugglery, more honesty and transparency, discipline etc. As such, the ECL, not relationships, will drive relationships!

Borrowers will need to rework banking and financing strategies and transform, quickly. The new reality is here. A word of advice to owners and management — wake up and change. If you don’t know how, seek help, you will need it …

Courtesy to Gulf News

Alya Auditors can be there for you at your service. Do’nt hesitate in contacting us.

Things To Be Done Before An Audit

Things To Do Before An Audit in UAE,DMCC

Documents Needed For An Audit

statutory audit is an examination of an entity’s financial records in accordance with the requirements of a government agency. A number of organizations must undergo statutory audits, including the following: Banks. Brokerage firms.

Before planning for statutory audit, we need to keep ready important document for audit. Here is list of important documents.What documents required by auditor at the time of audit?

SR NODOCUMENTATION
1AUDIT ENGAGEMENT LETTER
2OPENING TRAIL BALANCE 
3LAST YEAR SIGNED FINANCIAL STATEMENT
4COPY OF CAMPUTATION OF INCOME OF LAST YEAR
5SHAREHOLDING PATTERN
6LIST OF DIRECTORS
7LIST OF KMPs
8REGISTER 301 EXTRACTS
9MINUTES OF MEETING
10FORM 26AS
11FIXED ASSETS REGISTER
12INVOICE OF ADDITION TO FIXED ASSETS
13INVOICE OF SALE OF FIXED ASSETS
14TDS PAYMENTS CHALLANS
15PF/PT/ESIC/MLWF(WHICHEVER APPLICABLE) PAYMENT CHALLANS
16ADVANCE TAX PAYMENTS CHALLANS
17RETURNS COPY 
18LOAN PAYMENT SCH. & LOAN CONFIRMATION LETTER
19CASH BALANCE CONFIRMATION LETTER ALONG WITH DENOMINATION
20BANK BALANCE CONFIRMATION
21OUTSTANDING ENTRY PASSED:PROVIDE SUPPORTING XEROX COPY
22LIST OF RELATED PARTY AS PER AS18
23LEDGER OF RELATED PARTY FROM TALLY HAVING TRANSACTION
24CALCULATION OF FOREIGN EXCHANGE PROFIT/LOSS
25CASH LEDGER WITH TRANSACTION MORE THAN Rs. 20000/- 
26SECTION 274(1)(g) OF CO. ACT: REPRESENTATION FROM DIRECTOR FOR QUALIFICATION
27STATUS OF PENDING INCOME TAX ASSESSEMENT
28DRAFT FINANCIAL STATEMENT
29MANAGEMENT REPRESENTATION LETTER
30ANY CHANGE IN MOA/AOA
31CERTIFICATE UNDER SEC. 40(A)(3) & 269SS & 269T OF INCOME TAX 
32COPY OF ANNUAL RETURN FILLED WITH MCA
33CALCULATION OF DIRECTOR REMUNERATION AS PER COMPANIES ACT
34SECTION 383A: SECRETARIAL COMPLIANCE CERTIFICATE
35SHARE APPLICATION PENDING REFUND

Looking For DMCC 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.

All Forms of corruption in UAE coming to the end

# 1 Audit Firms in Dubai, UAE

Dr. Harib Saeed Al-Amimi, President of the United Arab Emirates (UAE) Supreme Audit Institution (SAI) and Chairman of the International Organization of Supreme Audit Institutions (INTOSAI), headed the UAE delegation at the 6th Global Audit Leadership Forum (GALF).

During the two-day event organized by the National Audit Office of the People’s Republic of China (CNAO) in Shanghai, delegates discussed topics related to environmental auditing, big data and big data auditing, including planning, quality control, data management and software development. Improving public accountability through environmental auditing was also
The GALF, held annually to discuss auditing in a global context, provides a forum for strengthening relationships, enhancing cooperation, and sharing knowledge and experiences among SAIs from different countries.


United Nations Convention Against Corruption

The Supreme Audit Institution (SAI) of the United Arab Emirates (UAE) represented the nation as part of the Conference of the State Parties (CoSP) Implementation Review Group in Vienna, Austria, May 27-31, 2019.

The event, held at the United Nations Office on Drugs and Crime (UNODC), included robust discussions on the implementation review mechanism, technical assistance, and financial and budgetary matters.

During the week-long event, SAI UAE participated in the 13th Open-ended Intergovernmental Working Group on Asset Recovery meeting, which highlighted dialogue on progress in implementing competencies, strengthening practical aspects, identifying challenges, sharing best practices, improving communication and coordination, and enhancing technical assistance and capacity building.

The event also included the 8th international governmental experts meeting, where attendees shared experiences, lessons learned, challenges and innovative solutions in fighting corruption.

Dr. Harib Saeed Al Amimi, SAI UAE President and International Organization of Supreme Audit Institutions (INTOSAI) Chairman, stressed the importance of the United Nations Convention Against Corruption (UNCAC), noting SAI UAE’s steadfast work in implementing and reviewing anti-corruption initiatives.

“The UAE’s implementation of the convention’s provisions was reviewed in 2013, and the convention’s governmental experts commended leadership’s dedication to fighting all forms of corruption, which causes severe damages, disrupts development projects and undermines the rule of law.”

Looking For Forensic Auditors in Dubai

Alya Auditors provide all services for clients in Forensic Auditing & Accounting,Due Diligence Auditing and 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.