The imposition of Value Added Tax (VAT) and other transformations in the tax system of UAE has a sufficient impact on the business operations. The complexity of financial management has increased because there are certainly more things to record, monitor, and analyzed as compared to the past. Consequently, companies need to audit each and everything, including profit and loss statements.
Nevertheless, market competitiveness and technological advancements have compelled the business people to adopt a pro-active approach towards the creation and review of financial statements. Still, many people overlook major activities related to the audit of financial records. It can be detrimental to the stability of your business.
Don’t know precisely why? Go through the post to get a fair idea of what and why a financial statement audit is essential for your business.
What is the financial Statement Audit?
Generally, the process of audit is referred to as the examination and commendation of items in a system. Similarly, an inspection of financial statements implies the review and examination of account books, bookkeeping journals, and other relevant records for verification and approval.
The audit report prepared at the end of this process indicates all necessary information that the organization has managed and compile the financial record as per the accounting policies and auditing standards.
It is noteworthy to state that the accuracy and truthfulness of financial statement audits help the companies maintain trustworthiness in the marketplace. As a result, shareholders and investors trust the credibility of a company.
However, it can only be assured with the help of experienced auditors. So, companies prefer hiring top audit firms in Dubai to get an independent review of their financial statements. It helps them ensure a fair and just financial performance of the company.
Reasons your business require Audit for Profit and Loss Statements
Because audit reports of financial statements enable the potential investors a clear picture of the company’s performance, it must include profit and loss. No doubt, it is a critical point where many businesspeople feel a bit concerned as statistics might discourage the shareholders. But, there are a few things that should be done for a must.
Here are given the reasons why you should get the profitability and loss documents examined in detail:
The first and foremost important factor for financial statement audits is the determination of profits and losses from an independent point of view. It is significantly essential that companies should have a clear understanding of their performance. Only then, businesses can engage potential investors as no one wants to invest for loss.
Therefore, a realistic picture of the company’s expenses and income can help the shareholders and investors to get engaged in your business. It provides a self-determining judgment for decision making.
The experienced auditors provide their opinion without any influence of the company’s internal financial officers. It distinguishes the grey from the black for the accuracy of financial records. In this way, the business companies become able to identify the loopholes in their account books for rectification.
Moreover, the comments and suggestions made by the external auditors help the companies to improve their management of monetary assets in the best way possible. It increases productivity in financial affairs.
Transparency of results
Companies usually hire third-party auditing services to ensure transparency. In this regard, the primary responsibility of public accountants is to examine the accuracy of recorded data in the financial statements. The record books with all invoices of the company’s expenditure and resources of revenue generation are reviewed for the identification of false or erroneous entries. It helps the auditors to ensure transparent financial statements.
As already mentioned, the environment of taxation is considerably changed in the United Arab Emirates. The companies should respond to the modifying scenarios wisely to retain their position in the marketplace. For this purpose, the accuracy of financial statements is essential to stay in the good books of the investors.
Therefore, companies should focus on a comparative analysis of monetary affairs. A review of the past and present scenarios helps in determining performance improvement for a defined business period. It’s the key to success in business for long terms.
External auditors ensure quality
Every organization, regardless of business nature and size, strives hard for the accuracy and quality of bookkeeping. For this purpose, financial departments are operationalized. However, internal financial officers can hide the facts from the management for any reason, including their wasted interests. So, it is imperative to keep a critical eye on the financial statements.
To ensure the integrity of accounting records, companies heavily rely on the top audit firms in Dubai for the verifiable examination of profit and loss in the financial statements. It results in high-quality audit reports in standardized formats.
Keynote: Audit is essential for financial accuracy!
Summing up, an audit is one of the essential processes in every organization across the world. The requirement for profit and loss of financial statements in the UAE helps the companies in VAT compliance. Not only this, but it is also significantly crucial for attracting and engaging the shareholders in a credible business relationship. All this leads to business success!
So, don’t forget to acquire the services of auditors with diverse industry experience to ensure a quality review of your financial records!