Role of Audit Firms in Dubai in Overcoming Financial Challenges in Service Sector Companies
The economy of the United Arab Emirates is the second largest in the Middle East (after Saudi Arabia), with a gross domestic product (GDP) of USD 414 billion (AED 1.52 trillion) in 2018. The Emirates have been successfully diversifying their economy.
Although the UAE has the most diversified economy in the GCC, its economy remains extremely reliant on petroleum (oil). With the exception of Dubai, most of the UAE is dependent on oil revenues. Petroleum and natural gas continue to play a central role in the economy, especially in Abu Dhabi. More than 85% of the UAE’s economy was based on the oil exports in 2009. While Abu Dhabi and other UAE emirates have remained relatively conservative in their approach to diversification, Dubai, which has far smaller oil reserves, was bolder in its diversification policy. In 2011, oil exports accounted for 77% of the UAE’s state budget
In the last couple of decades, the United Arab Emirates (UAE) has emerged as one of the most lucrative business destinations in the world. With its investor-friendly policies, political stability and supporting infrastructure, the UAE attracts global citizens to work and invest in the country. The government has been making conscious efforts to not only depend on ‘oil’ but to drive economic growth by way of diversification.
In spite of the liberal policies for businesses, the government is particular about companies complying with the law. One of the key steps that the government is taking is encouraging companies to ensure that their record maintenance is immaculate.
Companies, big or small, hire external audit services to get an unbiased reporting of their financial position and results that help readers to evaluate the actual performance. Auditors in the UAE not only assist in meeting statutory requirements but also provide operational and risk management guidance.
So what does the audit function entail?
An audit is simply checking for conformity of a process, product, or a system, with statutory requirements or international standards, International Financial Reporting Standards (IFRS) and other applicable laws.
Internal audit is an evaluation of the operation for effective governance, risk management and processes control. It is a proactive approach adopted to identify and mitigate emerging risk and not just assessing whether controls are in place. These auditors usually are certified internal auditors or chartered accountants who perform periodic reviews to identify the gaps in business operations.
The external audit is a statutory requirement for an independent examination of the financial statements by an external auditor appointed by the board or business owners. Companies’ internal teams may prepare the financial statements, but only a certified external auditor can evaluate its compliance with the provisions of IFRS and other applicable laws.
Globally and more so in the UAE, due to increasing awareness of the importance of good corporate governance and effective risk management, the demand for quality audit services has grown exponentially. Organisations are strategically outsourcing certain components or the complete internal audit function to qualified auditors. They can provide an unbiased opinion, which mitigates the risk of any internal fraud. Organisations also benefit from the services of external auditors by way of improved operational efficiency.
Role of Audit Firms in Dubai in Overcoming Financial Challenges in Service Sector Companies
Transportation, hospitality, and services industry
Transportation, hospitality, and services companies face increased growth opportunities while tackling disruptive changes in business and market structures.
ALYA’s experience auditing companies in the travel and airline industry as well as hotels, casinos, restaurants, food service, resorts, logistics, freight, and related businesses means our audit and assurance professionals understand your industry.
It is becoming increasingly apparent that regular audits are important to a business in numerous ways. Both internal and external audits are necessary to keep reports accurate, transparent, and law-compliant, thus creating a greater confidence among lenders, stakeholders, and statutory bodies. Apart from the statutory requirement, an operational review also highlights the gaps and future challenges that may arise.
Here are a few salient areas where an ‘audit culture’ can help organisations overcome financial challenges, and guide their business on the right growth path:
Knowing the real position of the business
Start-up or relatively small, family-owned businesses are always inclined towards managing all the business functions in-house and keeping all information to themselves. In doing so, decision-makers may not have a clear picture of the actual business performance or of the risks to which it is exposed. Consequently, plans for future development could emerge from an incorrect assessment of the present performance thus leading to opportunity loss.
One of the core purposes of any audit exercise is to give a clear understanding and insight into what the real position of the business is. While the company may make every effort towards proper maintenance of accounting records, a periodic audit is a great way to corroborate all the good work or point out any anomalies that might be present. Course correction suggested by the auditors often helps businesses to iron out major or minor hiccups, thus ensuring accurate information is served to various internal and external stakeholders and government bodies. Professional external auditors come with the backing of sound industry knowledge, and help even the close-guarded family businesses to convert perceived risks into opportunity.
Staying on track with Public Policy and Regulatory Change
One of the often overlooked aspects of running a highly profitable business is ensuring that your business adheres to the laws of the land. Any new regulation or levy of tax forces organisations to take a new look at their processes and ways of doing business. In such phases of uncertainty, business owners and senior management often find it challenging to keep their bookkeeping error-free so as to comply with the new regulations. A periodic audit allows the organisation to stay aligned with the existing regulations and adhere to the new ones. This ensures that the incidences of penalties arising out of non-compliance are minimised.
Introduction of VAT in the UAE is a great example of this. Due to the complexity associated with administering the new tax, businesses found it best to engage with external tax consultants.
Process Improvement and Efficiency
Internal audit is a great tool to help companies understand two key aspects:
a. whether the current operations follow the agreed process, and
b. how efficient the current processes are
This often leads to embracing new technologies and creating new processes that make the overall operations more efficient. Savings on costs and time by reducing wastage, removing the non-value-add process parts etc. can help organisations build profitability.
At times, a system of regular internal audits can prove to be an eye opener for organisations, as it can challenge processes that have prevailed over the years. Internal audit can bring ongoing and continual process improvements, and help organisations stay ahead of the competition.
Whether you are looking at attracting investors for your business, or simply looking at creating a strong brand, duly audited financial reports become instrumental in building up the required authority and credibility for the organisation.
Sometimes, processes that an organisation builds over a period of time are not robust enough to prevent or detect fraud or malpractice. Such frauds may lead to a leak in profits or loss of reputation for the organisation. Having a well-established system of regular audit can not only act as a deterrent, but also help detect any potential frauds at an early stage. This can help negate the possibility of large financial loss.
Our Forensic Audit uses Critical point auditing technique which aims at filtering out the symptoms of fraud from regular and normal transactions in which they are mixed or concealed. Here we mainly do analysis of some trends. We examine the unusual credits or debits in certain things
This also keeps investor confidence high, and maintains their loyalty with the company. Needless to say, this can be the single most important factor in success or failure of companies that operate in financial markets, e.g. banks.
1. Auditing Services
We provide year-end annual audit for many DMCC companies at reasonable fee. Our fees are reasonable and affordable by all types of companies.
2. Part Time Accounting Services and VAT Services
We provide Part-time Accounting Services for companies in DMCC Free Zone. You can hire a qualified and experienced part-time accountant from us and minimize your expenses by eliminating your personnel cost.
For More Details : Please visit us on : www.alyaauditors.com or write us to : firstname.lastname@example.org
For Financial Statement Audit,
3204, Park Lane Tower, Business Bay, Dubai
Phone : +971 4 876 9377, Mob : +971 52 4754007,+971 52 975 0690