Are You Aware of the Importance of Audit to Companies?
17

May 2019

When a business is set up, the one of the main agendas of the business is to maximise the profits of all the shareholders who have invested in the company as long as the company functions, but there might come a case where the company is unable to meet its requirements. In such a case the company requires an in-depth and thorough analysis of the complete working of the business. To remove any chance of being biased, a separate third party should conduct such analysis and present a complete and detailed report consisting of the drawbacks of the company and a possible solution to the problem. This process is known as the auditing of a company.

There are people who are convinced that the auditing process is not beneficial for the business and consider it just a waste of time and resources of the company. These people cannot be further away from the truth as auditing is a very crucial process that needs to be conducted by each and every owner of the business. The increase in the number of business sprouting up in the Middle East has vastly increased the demand for accountingand auditing firms all over the UAE and its adjoining areas.

Let us understand what an audit is and what are the advantages to a company of having an audit being performed.

Meaning of Audit

A financial audit is a control process. In an audit, either an individual or a combined entity goes through the workings and books of accounts of a company and try to find out if any process could be made better or if there is any fraudulent activity going on in the company. The audit process is a re-checking as the books of accounts which have been already prepared by an accountant. The auditor checks the work of the accountant and determines that the company is not hiding anything from the investors and the shareholders.

An audit process may last for a single day, or it may take weeks, depending upon the speed and expertise of the auditing firm and the size of the business entity being audited. The reason for performing an audit is that an audit report will help the company to understand the loopholes in the company and accordingly the management could take corrective decisions. At the end of the auditing process, the auditor prepares the audit report which provides a complete and accurate picture of the financial health of the company. This report plays a vital part in shaping the future of the company.

The Importance of Performing an Audit

By performing regular audits, a company can avail several benefits. Some of the essential benefits to a company are as below:

Finding Loopholes or Fraudulent activity in the Company

The complete and detailed analysis of the information generated by the company would lead to the detection of the fraudulent activity being performed in the company. As the management would be having all the required data, they would be able to take control of the situation and prevent the fraudulent activity or any such activity in the future of the existence of the company.

 

Better Decision Making

The audit report will provide a detailed analysis of the workings of the company. This would allow the management to plan and conduct any remedial activity they deem fit and would also help them in taking crucial decisions pertaining to the future of the company. This activity would also make the company more stable and help in the planning of VAT in UAE.

Enhances your Credit Rating

An audit report is a very good way to make your investors and shareholders know about the current financial situation of the company and provide them with a degree of reliability. The audit report would assure them of the bright future of the company or would help them to notice the steps taken by the management towards the betterment of the company. Seeing this the banks and other financial entities would be more willing to offer more affordable loans to the company.

Bring in more Investors

As the reliability of the entity would increase, the business would become a lucrative opportunity for the upcoming investors and entrepreneurs. Performing an audit will help potential investors to know about the company and how their hard-earned money would be utilized if they decide to invest in the company. Armed with the required data, the people would be able to make more informed decisions.

Fresh perspective

A good auditor would provide reliable and accurate information about a company. the individual or the team of auditors would not be biased with the company as they hold no interest with the company, financial or otherwise. From time to time, every business requires to see the company from a new perspective and performing an audit can help in this matter.

Having timely audits of your company will, in the short run, allow you to track each and every business activity and help you to stop any kind of unsavoury activity being conducted in the business. In a longer duration, an audit can increase the reliability of the business and enhance the credit score of the business. The audits will also provide you with peace of mind so that you can take steps for the improvement of the company. This is why it is always recommended that only a reputed and professional firm should be chosen to conduct an audit of the company.

If you are looking for a reputable auditing company in UAE, then JAXA will be a perfect companion for you. At JAXA, we provide you with a range of Auditing services according to the need of the business such as internal audit, statutory audit, Due diligence audit, etc. We also provide various other services such as TAX, VAT, Cash flow and Forecasting services etc. For more details on the services we provide do contact us – we would be happy to help.