Financial Investigation Process- A Mandate for Business Entities
17

Feb 2020

The company incorporation process is the outcome that involves multi-levels of planning, strategizing and brainstorming, with the ultimate intention of earning a profit. Fetching out more revenue is one of the critical aspects that every business seeks for at some point in time. Once you reach the breakeven, it becomes easier to calculate the profit figures. Now, getting your business close and earning profits is going to be a continuous process for your entity, but how well are you maintain your company finance? At some point, it becomes essential you need to do a financial investigation to understand the grip of finance that your business holds in the market. Wondering Why? Let’s have a look at the reasons as to why the financial investigation process is essential for any business, but before that, let’s gave a brief idea on the term “Financial Investigation”.

What Is a Financial Investigation?

In simple terms, the financial investigation process leads to the scrutiny of the financial documents of a company. When you carry out the business activities, and it gets recorded, it becomes essential to analyze and investigate them at some point of time to figure out the loopholes or illegal practices (if any) prevailing in the organization. Some of the core reasons as to why it turns out to be a necessary procedure for business entities are stated below:

1. Business Books are Investigated

The procedure of financial investigation starts by dealing with the accounting and bookkeeping records of a company. There might be instances wherein you are infusing the relevant requirements to excel your business, but then, you are not able to meet your organizational goal. If this scenario turns out to be positive for you, then you need to dig deeper into your company records. By doing so, you will be able to identify if there is any loophole existing in the business books.

Rectifying them at the earliest turns out to be the best option as your future planning will be based on the original business figures.

2.To Figure out Tax Evasion

The next reason that serve out to be a vital aspect when it comes to the financial investigation is that it will help you to understand the tax evasion or avoidance. It is well known that the UAE has implemented the VAT proceedings from 1st Jan 2018, at a rate of 5%, and complying them is a necessity for the business entities. If they are not met, then it turns out to be as an illegal proceeding in the eyes of the government. The financial investigation process will help you to understand the taxation proceedings that your business has been dealing with.

3.Involvement of Financial Forensics

When the ground of financial investigation gets infused in a business entity, multiple techniques are used to carry out the proceedings. Some of the widely used methods are highlighted below:

  • Anti-money laundering (AML)
  • Counter Financing Terrorism (CFT)
  • Physical Surveillance
  • Controlled Delivery
  • Suspicious Transaction Report (STR) etc.

The usage of these techniques will help you to understand the gaps or errors prevailing in your financial model. Understanding the findings and rectifying them will help you to deal with the financial ground in a much better way.

4. Get a Clear Count of Bad Debts Accounting

After implementing the financial investigation process in your company, you will get a better clarity regarding the bad debts accounting info that your business books contain. The lesser the bad debt count, the better for any organization. You need to understand that investigating the bad debt accounting books is equally as crucial as dealing with the regular recordings.

5.Eases the Audit Process

Carrying out the financial investigation process not only helps you to figure out the financial ground of your ground but also helps the external auditor to carry out the audit process. The report of the financial investigation process will turn out to be beneficial for an auditor during the external audit process. Considering the overall aspects of an organization, a financial score gets assigned that reveals the performance of the company. Scoring a better rank helps to improve the business reputation in the eyes of the auditor as well as the government.

If you involve the financial investigation process in your business entity, it will help you to drive your business growth. The Government of UAE mandates the business entities to carry out the financial investigation process through approved auditors in the UAE. JAXA Chartered Accountants stand as a professional accounting and audit firm, that helps you to carry out the business audit, accounting, tax, and investigation process in an error-free and hassle-free way. Our business experts are well-versed with the financial investigation process and cater to your business needs accordingly. If you are planning to implement the same in your business entity, do speak to our experts to understand the procedures. Contact us today-we’d be glad to assist.