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An external audit is a study and evaluation of a company’s financial situation carried out by an audit firm that is not connected to the company being audited. To assess the precision of the calculations and the recording procedures used, the external auditing process often starts with a review of the company’s accounting records. Finding out whether the company’s accounting procedures are legal and compliant with accepted accounting standards is one of the primary goals of external auditing in the UAE. The Financial Statements and the auditor’s interpretation of the company’s accounts are compared to ascertain whether the reporting accurately depicts the state of the business’s finances and overall financial health.
Since the enactment of Commercial Companies Federal Law Number 8 in 1984, audited financial statements have been mandatory in the United Arab Emirates. This need will be satisfied by the external audit carried out by auditors in Dubai and other UAE emirates, shielding the business from the possibility of fines or other penalties. A new federal law about commercial companies passed in 2013 outlined the penalties.
UAE Free Zones external audit requirements
UAE authorities will ask for audited financial statements as part of the licence renewal procedure. For licence renewal, Free Zone Authorities will always require audited financial statements. The audit report will facilitate a seamless and expeditious licence renewal process.
Financial Institutions and Banks’ Needs for External Audits
Most UAE banks will audit Financial Statements to assess the business’s creditworthiness when they are approached for lending approval. It is required for the approval of most other bank facilities.
Establishing trust in the company’s financial reporting is the main goal of an external audit, whether it is conducted in the UAE or elsewhere. It offers significant, albeit intangible, advantages to all business owners and executive managers in the United Arab Emirates. Also, audited financial statements can be important proof of any legal problems concerning the corporation. Moreover, the audit can also assist interested parties in accepting the accuracy of the company’s financial records, which is another advantage.
Rewind Consultancy – one of the top auditors in Dubai provide external auditing services. Our auditors will offer their professional judgement regarding the financial statements the company’s management has prepared and presented. Rewind Consultancy’s external audit services will guarantee that the accounting and auditing of your company continue to be faultless.
Opinion Types for Audits
A report by external auditors may include one of four kinds of opinions. Here are the types of opinions for audits –
Unqualified Opinion
If the audit reveals no major misstatements in the company’s Financial Statements, an unqualified opinion is expressed in the auditors’ report. This positive assessment reassures readers that the company’s financial situation is fairly represented in the Financial Statements.
Qualified Opinion
When an auditor’s report includes a qualified opinion, it means that during the review of the company’s financial accounts, the auditors discovered significant errors, misleading information, or experienced material misstatements.
The auditors will provide a qualified opinion if they cannot locate proof to support the company’s Financial Statements and records. In this situation, the qualified opinion will typically include a description of the issues encountered. A qualified opinion of this kind does not imply that the Financial Statements are false. Instead, it indicates that the auditors could not obtain reasonable certainty from the available information.
A qualified opinion will be included in the audit report if an auditor finds material in the company’s reports that does not follow the set guidelines for financial reporting. In this situation, the audited firm usually amends the reporting to address the issues and mistakes.
Adverse Opinion
An adverse opinion, the third category of audit opinions, states that the company’s financial records do not follow International Financial Reporting Standards (IFRS). Furthermore, it occurs where there have been flagrant misrepresentations in the financial data that the management has produced.
Disclaimer of Opinion
An auditor may occasionally be unable to finish an accurate audit report. A lack of proper financial records is one of the many possible causes of a disclaimer of opinion. When this occurs, the auditor reports on the company’s financial position and can note that it is impossible to determine an opinion.
At Rewind Consultancy, we have professionally qualified chartered accountants with extensive accounting, business advisory, financial consulting, internal auditing, and management consulting backgrounds. Rewind Consultancy is one of the best accounting and auditing firms in the United Arab Emirates.
We provide you with a comprehensive range of services, all from one platform, carried out by skilled and knowledgeable audit and accounting professionals. All government and free zone authorities acknowledge and recognise the external audit service offered by our group firm. Being one of the best auditing companies in Dubai, we can assist your business with any audit requirements, whether from government agencies, business bylaws, or other establishments.
An unbiased review of a business’s financial statements and documents by a certified auditor outside the company is known as an external audit. Dubai requires certain entities to conduct external audits to guarantee accuracy, transparency, and compliance with local laws.
Businesses in Dubai can get several advantages from external audits. Some of them are –
The organisation’s legal structure, size, and regulatory needs all influence how frequently external audits are conducted in Dubai. Large corporations might need yearly audits, while smaller organisations might only have to do so every three or every two years.
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