Audit Process and Procedure
Introduction of Value Added Tax (VAT) in the UAE on 1st January 2018 had been an important milestone in the business realm of the nation. Federal Tax Authority (FTA) is a part of the UAE Ministry of Finance, and handles rules and guidelines regarding taxation. Therefore, the audit process takes into account all these factors, helping companies stay on the right side of the law.
FTA is the federal authority that holds the power to verify the financial accounting of the various establishments in the nation and has the complete legal independence to enforce the guidelines that concern the law.
With VAT emerging into the business scene, there is a tremendous surge in the necessity for complete accounting. Subsequently, companies must record, verify and calibrate all their transactions to ensure complete legal compliance. Therefore, an audit is a key part of the business accounting segment.
The spotlight on a clean audit is sedentary. Moreover, the FTA holds the authority to check the legislation, compliance, and enforcement of taxation; hence auditing is necessary to keep the companies out of legal financial predicaments. In addition, an audit is a hallmark to the establishment that guarantees a clean financial record and proper taxation of the firm to its proprietors.
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Audit in the UAE:
FTA may have an audit process conducted on the premises of an establishment they find it necessary to be. This audit is set apart from the internal audits approved by the management. Therefore, these audits are taken under guidelines provided under VAT laws and Excise Laws.
- FTA conducts an audit after issuing a notification to the organization and can conduct the audits on the premises or may request submission of the relevant and necessary documentation.
- The notification will be given at least 5 days before the audit
- Authorities will square the returns and to avoid any predicament the companies may conduct their audit for filing tax at the appropriate period.
- After their audit, a report will be filed which may include violations if any found and may decide a penalty for the same.
For enquires call @ +971 45 570 204 / Email Us : [email protected]
Audit Process:
- The audits undertaken by the companies’ management are the backbone of having a clean and healthy financial record. The audit helps in finding out the underlying flaws in the company’s fiscal policies. After figuring out the issues within the internal policies, auditors can guide the management on how to rectify them.
- When the establishment requests an auditor or an audit firm to undertake an audit, they also negotiate a date for the audit process to take place on.
- After issuing the date, the company must keep the following documentation ready, which include:
- 1.Receipts
- Transaction records
- Import duties and expenses
- Finance data logs
- Previous audit reports
- Bank statements
- Ledgers, etc.
General requirements:
i.The UAE Commercial Companies Law enforces the companies to maintain their financial record for a minimum of 5 years.
ii.The audit of establishments in the mainland is obligatory.
iii.Submission of audit documentation may not be obligatory for the free zone establishments but the preparation of the audit reports is mandatory.
- On the prescribed date, the auditors come to carry out the audit. The audit may continue for more than one day that depends on various factors and the plans of the auditor.
- The auditors may request the knowledge of the company policies and the current undertakings or approved plans of the establishment.
- As a part of the audit process, the auditors may conduct employee interviews concerned with the financial records.
- The auditors check for inconsistencies in the financial records and also make sure their compliance with the laws and guidelines of the jurisdiction.
- Discrepancies identified during the audit become a part of the audit report.
- After taking everything into consideration, the auditors prepare the final audit report.
- After doing that, the audit process moves onto organising a conference between the auditors and the company management.
- During the meeting, both parties discuss methods to rectify flaws and make the company more fiscally responsible and successful.
For enquires call @ +971 45 570 204 / Email Us : [email protected]
The Audit Report and Importance:
The audit report issued after the audit is a crucial piece of record that is demanded at various instances in the future. Also, the report contains the companies’ financial endeavor and its validity along with a clear statement recording the financial flow and liquidity. The audit report may indicate the legitimacy of a firm.
- The reports help in avoiding financial misrepresentation. In most cases, new investors always look up the audit reports of the establishment to derive the conclusion they require.
- With proper reports, the financial stability of the company can improve, by avoiding further discrepancies.
- The reports indicate the viability of the companies’ expansion. Therefore, these reports are very useful for several future endeavours.
- With an audit report, the team can easily detect fraudulent activities and do the needful to rectify them.
- The audit ensures clean tax returns and avoids any legal predicaments that the establishment may encounter.
For enquires call @ +971 45 570 204 / Email Us : [email protected]
Why choose KGRN Auditing services?
In terms of auditing, the KGRN auditing firm is an accomplished and well-established firm. With widespread acceptance of the firm’s reports throughout the UAE, the firm’s skilled auditors assist clients with the utmost competence.
The firm’s report has broad validation in UAE banks and businesses, providing clients with a value-based service. As a result, the reports are of the highest quality, ensuring the financial prosperity of the trusted client.
For enquires call @ +971 45 570 204 / Email Us : [email protected]
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