Financial Statement Audit

What is a financial Statement Audit?

An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an “Audit Society”

A financial statement audit is an independent appraisal of the financial statements prepared by the organization. The basic objective of a financial statement audit is to provide an independent or third-party assurance that the management has, in its financial statements, presented a “true and fair” view of a company’s financial performance.

What is the purpose of conducting a financial statement audit?

Having an expert opinion independently from the management of the company is highly essential to ensure that what is reflected through balance sheet / statement of financial position or Profit or Loss Account is reliable or not. The purpose of a financial statement audit is to add credibility to the reported financial position and performance of a business. Tax authority need the confirmation of sales and income, Lenders typically require an audit of the financial statements of any entity to which they lend funds. Suppliers may also require audited financial statements before they will be willing to extend trade credit.

What is the importance of Audit in the UAE?

Audits have become almost mandatory in the UAE both in the free zones and in the mainland. In the free zones, authorities insist filing of audit reports as mandatory requirement for renewing the license of the company. In the mainland, as per UAE commercial company law annual audit is required to be done. Moreover, wherever bank has financed materially, they will insist filing of audit report for continuing the finance facilities. Sometimes, suppliers or customers or other stake holders ask financial audit report, time to time. With the implementation of UAE VAT, additional responsibility will be there most probably to the management of the company to confirm the turnover through the audit report.

Internal Audit

Internal audit is a dynamic profession involved in helping organizations achieve their objectives. It is concerned with evaluating and improving the effectiveness of risk management, control and governance processes in an organization.

To do this, we work with management to systematically review systems and operations. These reviews (audits) are aimed at identifying how well risks are managed including whether the right processes are in place, and whether agreed procedures are being adhered to. We will also identify areas where efficiencies or innovations might be made. We organize Internal Audit under an ongoing program of review and advisory activity this is based on the strategic needs of an organization.

Valuation & Financial Restructuring

Valuation refers to the process of determining the present value of a company or an asset. It can be done using several techniques. Analysts that want to place value on a company normally look at the management of the business, the prospective future earnings, the market value of the company’s assets, and its capital structure composition.

Financial restructuring is the reorganization of a business’s assets and liabilities. The process is often associated with corporate restructuring, where an organization’s overall structure and its processes are revamped.

Value Added Tax (VAT)

VAT Registration

Value Added Tax (VAT), an indirect tax levied on consumption of goods and services has been adopted as a system by almost 160 countries globally. This tax serves as another segment for revenue generation for the higher authority. The Middle East country UAE is one of the most dynamic countries of the world. The Emirates have got several zones that have been considered as a business free-tax zone that became the center of investment for foreign investors. If your business is registered under VAT law, it signifies that it holds a recognition in the eyes of the government. Having realized this, the GCC countries have recently registered themselves under VAT law and implemented it by 1st Jan 2018 with 5% as the VAT rate.

If you are a business owner in UAE or planning to establish your business roots in the Emirates, be it a small, medium or a large business, you need to get your business registered under VAT law. Before moving to the process let’s have a look at the entities who should register for VAT, the importance of VAT followed by the registration process and other essential documents and information.

Penalty for Non-Registration under VAT

Any company that misses the VAT Registration Number cutoff date or fails to complete the VAT registration process under the deadline set by the Federal Tax Authority must undergo a fine of AED 20,000.

VAT return filing

In simple terms, VAT return filing states how much VAT is to be paid or reimbursed by the tax authorities. A VAT return is done quarterly, and it helps the business to track the business VAT path.

VAT is also charged for business entities involved in the business activities with other countries. While carrying out these activities it’s better to be VAT compliant to avoid any kind of penalty that becomes a hindrance in the way.

Who Should File VAT Return?

All registrants are required to file VAT return, irrespective to the type of VAT registration or sales, purchases, output tax, input tax, etc.

Benefits of Filing VAT Return

VAT compliance brings along with it a certain business goodwill. In fact, many large firms are often reluctant to conduct business with companies that aren’t VAT-registered. The business image gets highlighted once registered under VAT lawVAT is easier to manage as compared to any other indirect tax Thus, you can see how important it has become for business entities to implement VAT filing process and also to become VAT compliant while carrying out multi-national businesses. VAT filing not only protects your business but gives a legal assurance and proof of your business existence and it holds an upper-hand in the arena of tax payments and avoids financial loss.