An external audit is an independent examination of the financial statements prepared by the organization. It is typically conducted for statutory purposes because it is necessitated by the legal system or statutory provisions.
An external audit is conducted by an independent auditor examining, analyzing, and certifying the accuracy of the financial statements prepared by the company. It is binding by law on all companies registered under the UAE Commercial Companies Law, to be audited annually. Further, even some Free Zone authorities have made it mandatory to submit the audit reports.
The purpose of a statutory audit is to determine whether an organization provides a fair and accurate representation of its financial position & if funds were handled properly by examining information such as bank balances, bookkeeping records, and financial transactions.
The shareholders of a company can choose any registered statutory auditors or audit firms in UAE in general meeting.
Companies in the UAE are required to complete their audits in accordance with international financial reporting standards. We can advise you on what is the best reporting to meet your financial needs.
An external auditor must be professionally qualified and specialized in the field of Auditing. An external auditor can also be appointed by the government to go through and conduct an examination of the financials of a company if the government detects a case of fraud or misleading information.
Advantages of an External Audit
- PROVIDES A COMPREHENSIVE REPORT Auditor presents an audit report which will simplify and present all the workings of the company which would help the management to take remedial actions regarding any slow or faulty process.
- SURETY OF COMPLIANCE An auditor sees to it that the books of accounts are made according to the rules and regulations of the concerned authority.
- IDENTIFIES WEAKNESS After properly scrutinizing the audit report, the management of the company can decide if any of the processes needs tweaking. This would help in understanding the weakness in the process and the management will take remedial measures accordingly.
- AN EXTERNAL AUDIT PROVIDES CREDIBILITY Having your financial statements verified by an external auditor can lead to more credibility in the business marketplace than those that have not. Should you be seeking to raise finance or sell your business in the future, providing audited accounts gives security that your accounts are free from material error or misstatements, making you more likely to be successful in achieving your goals.
- AN EXTERNAL AUDIT GIVES SHAREHOLDERS CONFIDENCE An independent review of the financial statements can provide transparency to the shareholders that the company is being run within their best interests and can highlight any issues that have occurred which may not have been brought to their attention.
- A DIFFERENT PERSPECTIVE As the external auditor is a separate third party and has no relations to the company whatsoever, he would be unbiased towards the company and would present his reports and the corresponding views in such manner.
We at RVG Chartered Accountants can assist you with all your auditing needs in UAE.
- At RVG, we conduct the audit in accordance with the provisions of the international standards of auditing (ISAs) and as per International Financial Reporting Standards (IFRS).
- Our team of RVG chartered accountants goes beyond traditional fundamentals and adds tangible value, seeing to it that auditing assumes a strategic and productive role in today’s corporate governance environment.
- We also identify areas for improvement and suggest means to help you to achieve your organizational objectives and make a positive contribution to the successful operation of your business.
- Getting the books of accounts audited by the best auditing firms in UAE helps the companies comply with the local and international regulations thereby improving the company’s credibility before the stakeholders, government, lenders, and other authorities.