Types of Audits in UAE that Organizations opt in Business

Every organization, no matter public or private, has to deal with financial transparency to ensure success. In this regard, business companies always adopt a vigilant approach in the form of audits. So, the business owners pay higher attention to review all aspects of monetary affairs for streamlining to keep a check on the transactions.

Are you running a business and want to be on top of your business financial health, including complying with commercial laws and regulations? The audit is the first step towards knowing your number and compliance with applicable laws & regulations. So, consider getting a comprehensive understanding of audit types, as discussed in this article.

Types of audit that every business owner must know

Nevertheless, an audit is categorized into several levels and types to assure business objectives, purposes, vision, and scope. It is imperative to note that every audit inspection has to comply with rules. Therefore, international standards of Auditing are adopted while conducting a review of financial assets.

For this, companies usually acquire auditing services in UAE to review and analyze the documents. Let’s get started with the types to help you manage your business effectively.

External Audit

It is referred to as the examination of financial records by an independent auditor. The audit is usually conducted by the external auditors appointed by the company management. The audit is intended to certify the financial statements of a business to the relevant stakeholders enabling them to know the business health, controls, and effective operations. It also helps external parties to assess investment prospects in an organization.  

Internal Audit

The audit is conducted to assess the performance of an organization. It is related to the policies, regulations, standards, and other control elements of good governance. It is also called Internal Review. It enables the companies to ensure accurate recording of accounting transactions, financial treatment, and other general and system controls.

Due to the critical aspects, companies based in the UAE and other parts of the world should choose the job professionals. , It is highly recommended to acquire the services of top audit firms in Dubai for optimized risk management.

Forensic Audit

It is referred to as the evaluation of financial records to derive potential evidence of fraud or mismanagement; usually, it is required to proceed with a court case. However, the management or a separating partner can also demand for it. The forensic audit in Dubai is usually conducted by Auditors registered with Dubai Courts. It is a sub-branch of audit & accounting with a specialization in financial threats and criminal activities.

The business suspected of any fraudulent activity is examined to find potential loopholes using forensic audits. The main objective is to find the elements of mismanagement to improve transparency and controls.

Tax Audit

Generally, the tax audit is performed by government institutions dealing with taxation. For instance, the Federal Tax Authority is responsible for handling all matters related to the UAE tax.  The authorities may differ in other countries, but compliance requirements are imposed on every business organization operating anywhere in the business world.

However, companies should comply with commercial laws and value-added tax regulations (VAT). According to this, every organization meeting the minimum threshold need to register for VAT in Dubai. You can go through this process by getting assistance from the best VAT consultancy firms to avoid non-compliance penalties by the tax department. Therefore, it is recommended to conduct a Tax Health Check of your business before state authorities conduct a tax audit to eliminate the risk of fines, penalties, or tag on the business license.

Statutory Audit

Statutory Audit is part of the External Audit; usually, both the terms are used interchangeably. It serves the same purpose as External Auditor. Most in listed companies audit requirements, the Statutory terms audit is used while in the non-listed or general business world, External Audit is used.

Financial Audit

It is a major type of audit in which the financial documents are examined for accuracy, completeness, and adherence to internal controls and procedures; it is also used to eliminate errors. Usually, the organizations take advice from the experienced audit experts to improve their financial statements for compliance with standards. In this regard, professionals help organizations to follow international accounting standards for maintaining financial bookkeeping and reporting.

The formats and standards may vary depending on the countries. However, the government of the UAE has adopted International Finance Reporting Standards (IFRS). Some states, such as the USA, use GAAP as the standard for financial reporting. So, the audit is to confirm the use of standards.

IT Audit

An information system audit is a comprehensive analysis of everything that comes under the category of technology infrastructure used by a business, especially the financial & operation system. It generally covers the structure, the system to protect the information, the security mechanisms used for protecting the information, and the integrity of financial data.

The financial audits cover the review of IT infrastructure, especially when the companies are using accounting software to manage their bookkeeping journals.  Therefore, such an audit deals with the examination of integrated IT systems.

Special Audit or Agreed Upon Procedure Audit

An Agreed upon Audit or Special Audit is a set of standards set by the company or a client to examine companies' financial and non-financial data. Auditors agree that the hiring party's specific scope and the audit report are restricted to set the scope and appointed the auditors. For example, an investor or an acquiring company can appoint an independent auditor to carry out a specific business audit under acquisition to make a decision.

Feel overwhelmed? Get help from audit experts!

Summing up, Audit is something essential to track the recorded financial data for authenticity and transparency.  Financial matters can be tricky if not handled wisely; therefore, businesses should consider hiring the top audit firms to ensure effective compliance. It will help them streamline their business processes for effective, compliant, and efficient operations.

Don't forget to opt for an appropriate type of audit based on your business nature, requirements, and compliance! Contact Us to book a consultation with expert auditors!