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The Benefits of an External Audit in the companies in the UAE

Business owners often spend copious amounts of time managing their company’s financial information. Accounting is the primary tool for recording, reporting and analyzing financial information. Business owners can use external audits to review their accounting processes and financial information. Public accounting firms are usually responsible for conducting these audits. Professional accountants will interview the owner, discuss the accounting process and test the company’s accounting information. External audits offer several benefits for small business owners.

Provides Validity

External audits provide an objective opinion on a small business’s accounting process. Many small business owners do not have an in-depth understanding of accounting principles. They simply prepare accounting information the best they can according to basic accounting rules. Professional accountants can review this information and provide business owners with insight into the accuracy and validity of the accounting information. Valid accounting information can help business owners secure external financing from lenders and investors.

Discovers Errors

Business owners can use external audits to discover errors in their accounting process. Errors in accounting information may prohibit business owners from making the best decisions. Business owners can also find it difficult to review historical financial information and discover trends if errors are in place. Trends allow business owners to plan future production output and estimate sales for the upcoming months. External audits also ensure business owners are recording financial transactions according to generally accepted accounting principles (GAAP). GAAP is the highest U.S. authority on accounting standards and must be followed when preparing business financial information.

Limits Legal and Tax Issues

Professional accountants provide business owners with information on the legal and tax issues relating to accounting information. Legal issues arise when business owners provide inaccurate or fraudulent accounting information to lenders, investors, and the general public. Business owners are usually liable for not reporting their company’s financial information accurately.

Incorrect accounting information can increase a company’s tax liability. Overstating income, inventory value, or other items can significantly increase the amount of taxes owed by the company. Small businesses organized as a sole proprietorship also need accurate accounting information since income will be reported on the business owner’s personal income tax return. Inaccurate accounting information can trigger a personal and business tax return audit.

Educates Business Owner

External audits can help educate business owners on the importance of accounting information in business. Business owners often work closely with external auditors to improve their accounting process. External auditors may provide business owners with information on current accounting issues. Public accounting firms may also provide business owners with free educational seminars to improve their companies’ accounting process. Creating a personal relationship with a public accounting firm provides business owners with professional insight for future accounting questions.

How can we help?

Alya Auditors serves businesses in the UAE with their experience in auditing, accounting, and VAT in the UAE. Experts will help them grow their business without having to combat challenges posed by inefficiencies in accounting tasks. We can also help entrepreneurs looking to start their dream business in the UAE. Get end-to-end accounting support coupled with the benefits of new-age technology that they use to boost your accounting tasks.

Apart from the above services we are also helping the companies and businesses in the UAE to file their ESR notification.

Learn more about Alya Auditors and its offerings

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