Financial audits aim to increase the trustworthiness of a company’s financial status and performance. By utilizing financial audit services, a business can gain valuable insights that can help improve the company’s overall financial standing.
Financial Statement Audit
A financial statement audit is a comprehensive examination of a company’s financial records and disclosures, performed by independent auditors. The goal is to ensure that the financial statements accurately reflect the company’s financial performance and provide a fair and honest representation. The auditor’s findings are presented in a report, which is released along with the financial statements to stakeholders.
Objectives of Financial Statement Audit
- The purpose of the financial statement audit is to enable the auditor to issue an opinion on the accuracy and completeness of the financial statements prepared by the company’s management.
- It is crucial that the financial statements are prepared in accordance with established accounting principles and legal requirements. The auditor’s report must include all relevant and material information.
What are the types of Statements Audited?
- Income Statement
- Balance Sheet
- The Cash Flow Financial Statement
- Statement of Changes in Equity
- Audit Opinion Letter
The income statement provides information on a company’s financial performance, including its revenues, operating earnings, and expenses. This statement gives a comprehensive view of the company’s operations, including direct and indirect expenses. An investor or analyst will examine the income statement to gain insight into the company’s financial performance over a given period. The auditor’s role is to verify the accuracy of the transactions by reviewing the cash book and individual accounting records.
The balance sheet, also known as the statement of financial position, provides information on a company’s worth from a book value perspective. It shows the company’s assets, liabilities, and shareholder equity as of a specific date and is organized into three categories. The auditor will review the existence of assets and liabilities and ensure that the figures presented are accurate. The balance sheet must balance, with assets equaling liabilities plus equity. Analysts may also look at the company’s total capital, which combines liabilities and equity. A thorough analysis of the balance sheet can provide a quick overview of a company’s financial position.
Cash Flow Statement:-
The cash flow statement provides a view of a company’s cash balance and its ability to fulfill obligations such as paying suppliers, employees, and other expenses. It shows the cash transactions and flow of funds during a specific accounting period and provides a summary of the total available liquid cash. The auditor may verify the entries in the cash flow statement against the bank statement and check the accuracy of any accompanying footnotes to ensure the accuracy of the information presented.
Audit Opinion Letter:-
The audit opinion letter is a document issued by the auditor after conducting an audit. This letter is part of the audited financial statements and includes a summary of the financial statements reviewed and the audit process used. If the auditor finds no material errors in the financial statements, they will provide an opinion that the statements provide a true and fair representation of the company’s financial performance and position.
Stages of Conducting Financial Statements Audit in UAE
The steps to follow for conducting a financial statement audit in the UAE are as follows:
- Planning and Risk Assessment: The auditor must have a thorough understanding of the business and its operating environment, and identify any potential risks that may impact the validity of the financial statements.
- Internal Control Testing: The auditor evaluates the effectiveness of the company’s internal control procedures, including authorizations, asset protection, and separation of duties. If the controls are found to be strong, the auditor may adjust their audit procedures accordingly. If weaknesses are found, additional testing will be conducted to assess the accuracy of the financial statements.
- Substantive Procedures: The auditor conducts a range of procedures to verify the accuracy and validity of the company’s financial data. The financial statements undergo the most intense scrutiny during this stage to ensure their accuracy and correctness.
A financial audit checklist can help simplify the preparation process and achieve the desired outcome by providing a starting point for everyone involved.
- General ledger covering the entire fiscal year.
- Internal financial statements.
- Articles of Incorporation and Bylaws.
- Equity certificates.
- Accounting Policies and Procedures manual.
- Organization charts and systems documentation (memos detailing the flow of transactions within the company).
- Bank notes, security agreements, and lease agreements.
- Minutes of meetings of the Board of Directors and any other oversight committees.
- Fiscal year budget.
- Your financial auditor will need access to all paid bills and checks received during the year.
- Reconciliation and schedules supporting all asset, liability, and equity accounts.
Financial Statement Auditing Firms in Dubai
Financial statement audits enhance the reliability of a company’s financial data, enabling shareholders and owners to make informed decisions. If you need precise auditing services, consider working with our experienced auditors in Dubai, UAE who have a proven track record of providing comprehensive audit solutions to various clients.
Elevate Auditing is an auditing company in Dubai that is committed to giving the best auditing service to its clients. We offer Internal Audit services, External Audit / Statutory Audit services, Inventory / Stock Audit Services, Fraud Investigation Services, Statutory Compliances Services, Revenue Audit/Sales Report Services as well as Due Diligence Services. Our experienced auditors in Dubai can help you complete a company assessment which will help you in focusing on your SWOT (Strengths, Weaknesses, Opportunities, and Threats).