Preparing for an annual audit can be a problematic task, particularly for firms in the UAE where compliance regulations can be complex and strict. An annual audit is a legal requirement in the UAE, and it involves a thorough inspection of a business’s financial records, statements, and transactions by an independent auditor.
It is vital to approach this process with a well-prepared tactic and sufficient knowledge to ensure a smooth and successful audit. In this article, we will discuss the important steps that companies in the UAE should take to prepare for an annual audit.
Steps to prepare an Annual Audit in the UAE
The following steps will help the companies in the UAE to prepare their Annual Audit;
1- Collecting and evaluating data
In the accomplishment of audit fieldwork, collecting and evaluating data is a vital step to determine the effectiveness of an organization’s internal controls. This process usually involves communication with corporate authorities, reviewing documents, and gathering information to create inclusive audit reports.
2- Opt for a Reliable auditor
Audits can be somewhat stressful, especially for first-time auditees. This is due to auditors being occupied during audit season, as they are accountable for auditing multiple companies on the same day. So, it is generally suitable to be picked a capable and proficient team of auditors like Farhat and Co. that is prepared and organized. After that provide them with all essential information to enable a smooth audit process.
3- Provide the Auditors with the required “PBCs”
When conducting an audit, the term PBC or “Provided By the Client” is usually used by audit firms. They will set a deadline and request a list of information that is essential to be provided promptly and correctly. It is important to communicate with the hired audit firms in dubai to understand specifically what information is required and not submit it just for the sake of it, as this could lead to problems later on.
4- Preparation of Documents
To prepare for the annual audit report, it’s crucial to have key documents readily available for the auditors such as;
- Payroll Records
- List of all bank accounts
- Partners or Shareholder Register (PSR)
- Minutes Meetings
- List of all Transactions
- General Ledger
- Trial Balance
- Duplicates of Leases, Loans, Contracts
- Current Loan Statement
- VAT Return Filings
- AML Program Manual
Legal documents are also important to keep such as;
- Memorandum of Association (MoA)
- Article of Association (AoA)
- Number of shares
- Trade license
- Tax Registration Number (TRN)
5- Make Queries Promptly
After receiving the PBC list from the auditors, it is important to review it prudently and ensure that your company knows all the requested information. If there is anything that appears indistinct, it is necessary to ask questions and seek an explanation before the audit takes place.
6- In case of Errors detections in Auditing, Assist the Auditors
During the analysis phase of an audit, auditors may find errors or variations in the data provided. In such a situation, it is important to determine the detailed aspect of the audit the auditors were testing for. As this could be an accidental error on your part. It is possible that the information provided was partial or not what they were looking for.
In such cases, effective communication and explanation are critical. You can provide the auditors with new records, or be transparent and inform them if you don’t have the essential information. This is a common occurrence when working with a new audit firm in Dubai, so there is no need to panic.
7- Maintain Documentation
Proper documentation is important for the smooth functioning of any business. When preparing for an annual audit report, maintaining all relevant documentation is a critical component. This includes important records such as;
- Payroll information
- Bank account details
- Transaction history
- Trial balances
- VAT return filings
- Loan statements
- Contracts
These documents serve as dynamic evidence for auditors. They allow them to assess the financial health and compliance of the business. So, it is important to ensure that all documentation is properly maintained during the audit process.
8- Address the issue promptly
To avoid any problems during the annual audit, it is important to proactively communicate with your auditor if your company has recorded any infrequent transactions. Waiting until the year-end to address such problems can lead to errors and misstatements in the financial statements, which may affect the audit report. By reaching out to your auditor and ensuring that the transaction has been correctly treated, you can help ensure the accuracy and reliability of your financial records.
To sum up the discussion
Preparing for an annual audit can seem overwhelming, but with the tips, we have mentioned in this article, you can make the process smoother and less stressful. If you need assistance in preparing for your annual audit, consider reaching out to a top leading audit firm in Dubai.