Anyone who has a business or a company with a lot of people who are responsible for completing different tasks may face a risk of error or irregularities in the business. The audit is the best solution to point out all these errors if you have your company in Dubai. It can be very beneficial for a company as it will improve the efficiency of the business. The management will better understand the working and financial system of their company.
The stakeholders, supplier or the financiers will know that the risk is properly assessed and effective strategies are being used to overcome them. With the help of the auditing process, the employees will know the financial area which needs improvement and the way in which this improvement will take place. Having an audit in your company will also lessen the risk and then the cost of capital.
In the process of auditing, the management will be able to identify the flaws in financial records or frauds. Other benefits of having a financial audit of your company in Dubai may include the following:
1. Improves communication:
Mostly higher authorities relay on the data which is provided to them by the management. This data is needed to make a crucial decision about the future plans of the company. There is a high chance of error in the data collected and audit is needed to remove that error. The audited financial statements are important for the success of a company because they provide accurate and timely information about the financial situation of a company. The management will know that the auditing committee will highlight the errors, whether they are intentional or unintentional.
2. Better management:
Researches show that the companies who undergo the audit process are more profitable and have better management system as compared to the companies who does not have the annual financial audit. Selection of a perfect company which will provide the auditing services is a crucial thing for the success of your business. Experienced auditors have a lot of expertise in the field and they will perform the process in a better way. They will also help you identify the small opportunities which can form as a major improvement in the near future.
3. Expert recommendations:
The auditors are trained in a way that they focus on the tightening and improvement in the business processes. This process will reduce the amount of risk in the financial data. An auditor is the one who will provide you with the unbiased suggestion apart from his likes and dislikes. The company may apply some strategies for so long that they become dangerous for the internal control. The auditor will help you identify these type of hazards. By avoiding them, you will be able to develop a new and more effective system of strategies for your business.
The auditing process is a short term sacrifice for a long term reward. Once the audit has done properly with the cooperation of the management and the auditor, your business may become more profitable with very less risks.
Audits are of different types but we can differentiate them broadly into two categories and they are : Internal and External Auditing. Internal audit is a formal inspection of a company’s internal controls, like accounting and corporate governance, with the aim of proposing improvements in the system and spotting any inadequacies before they are discovered in an external audit. Its role is to verify and ascertain that one or more functions of an organization are operating effectively, efficiently
Benefits of an Internal Audit
- An internal audit functions as a management self-regulating procedure for any company
- Via an internal audit, one can gauge one’s company’s:
- Transparency and accuracy of financial transactions
- Degree of compliance with corporate regulation and institutional policies
- Internal audit provides an independent assessment of an organization’s financial and operational activities
Internal Audit in Finance
Internal audit comprises the following activities, which directly impact the financial health of a company:
1. Compliance Review
Compliance review sees to it that an organisation is following norms, regulations, laws, codes of practice and guidelines, as they apply individually and collectively to a company’s business functions.
2. Risk Evaluation
An internal audit helps in identifying key activities and related risk factors, assessing their importance. With time, internal audit practices have evolved to follow a proactive and risk-based approach. This enables a company to apprehend any possible future concerns and opportunities, in addition to identifying current issues.
3. Business Process Analysis
Internal audit invariably reviews a company’s processes and operations to establish if results are in line with business objectives, and if the former are being carried out as planned.
4. Management Advisory
Internal audit looks into the extent of implementation of management policies, as well as the tone and risk management culture of a company. This aids the management to modify or recourse company action plans.
Distinction Between Internal and External Audit
An external audit is carried out primarily for an annual statutory audit of financial accounts, checking its alignment with a company’s actual financial standing. Consequently, external auditors often inspect and verify internal controls instantiated to manage risks which could affect financial accounts, to check if they are in order.
Here are the key differences between internal and external audit.
1. Conducted to identify systemic inadequacies, to initiate management action for carrying out recommendations for change leading to improvement in performance and control.
2. Examine issues related to company business practices and risks.
3. An internal auditor is generally an employee of the company conducting the audit.
4. Responsible to the management of the company.
5. Can provide advice and other consulting assistance to the company.
6. Can be conducted anytime, and at desired intervals.
1. Conducted to formally check the financial statements of an organization, and to evaluate the effectiveness of internal audit work.
2. Examines the financial/statutory records and checks their regulatory alignment.
3. An external auditor is hired on a temporary basis from a third-party firm.
4. Responsible mainly to the shareholders of the company.
5. Generally not involved in supporting the company being audited too closely.
6. Is commonly conducted on an annual basis.
Reasons For Auditing Your Company
Internal audit services
handle affairs that are primarily instrumental to the survival and growth of any organization. An internal audit would look beyond financial risks and accounts to encompass wider issues like a company’s revenue metrics, customer reputation, its environmental impact and employee satisfaction.
Internal auditors help an organization to succeed and prosper. This is achieved via a combination of assurance and consulting. Assurance involves telling company stakeholders how well the systemic functions and processes of a company are working. Consulting caters to refining these functions and processes where called for.
Here are the top 5 reason to conduct an audit:
- To insure the effective operation of an organization.
- To review compliance with a multitude of administrative regulations.
- To instill a sense of confidence in management that the business is functioning well and you are prepared to meet potential challenges.
- To maintain/enhance the organization’s reputation in the community.
- To perform a “due diligence” review for shareholders or potential investors.
Not all policies, practices, and procedures are committed to writing. It is vitally important that companies have a process to ensure that everything stays up-to-date and legal, AND actually works as intended.
Do you want things to run smoothly? Conducting an audit is one way to accomplish that.
Alya Auditing to perform your audit and help you overcome these challenges.If you are a company operating in Dubai, no matter large or small, it is advisable to plan your control strategy with an audit firm in Dubai. Alya Auditors can help you with it. We have experienced hands in auditing and consulting corporations, and are one among the emerging audit firms in UAE. Contact
us for any information on internal audit; our certified internal auditors would be glad to assist.