All the businessmen know and understand the importance of audit in a business. An audit not only helps in understanding the current state of business but also helps in analyzing the business so that it can prepare a business strategy for the future.
There are majorly two different types of audits which a business can apply to itself and understand the working and the trend of the business. These audits also help the management to understand the bottlenecks of the business and allow them to prepare for any future problem which can affect the business. These are namely Internal Audit and External Audit.
In this article, we will be talking about the information which a business should know if it wants to conduct an internal audit in the United Arab Emirates.
What is Internal Audit?
This is a type of audit that will be conducted by an auditor or a team of auditors who are a part of the organization. These auditors will survey the workings of the business organization and will produce a report at the end of the audit. In this report, the auditor will mention the current situation of the business as well as the various loopholes and bottlenecks, both present as well as potential, which can and are affecting the business and how can the management tackle these problems.
If you are looking to conduct an internal audit of your company, then you can follow the following steps which will provide a guideline and will help you to conduct the audit in a smooth and simplistic fashion. Here are the different steps which need to be stressed upon during an internal audit:
- Identifying the weak points in the Business
Many businesses are very big in size and auditing every single activity in the business can be a very time taking and costly process. As a solution, the management can identify which are the activities of the business require a thorough audit. These can be the important activities and departments of the business and the analysis of these activities will help the management to save the resources and raw materials which are being used in the business.
- Determining the need and frequency of Audit
A business needs to be audited again and again, especially after any change is made or the performance of the business starts to vary from the projected path. But auditing is a time taking activity as well as it also uses a lot of resources of the company. This is why the management should find out the correct time and frequency when the audit of the company should be conducted. Usually, a business conducts audits annually but according to the size, nature and requirement of the business, this timing can be changed to quarterly or monthly.
- Recording the results of the Audit
At the end of the audit, the auditor creates an audit report which provides the analysis and recommendations of the auditor. This audit report must be kept as these reports can be used to understand which activities of the business require greater attention. Later on, these audit reports can be used for the purpose of comparison with the current audit report to find out how much deviation has happened and what can be the potential solution.
- Developing a plan
Once the audit has been conducted, the management needs to analyze the audit report and then prepare a business strategy that will help the business in the long run. This plan should be developed in such a way that it addresses all the present and potential shortcomings of the business. The plan should also take into consideration the present trend of the business and what will be the trend followed in the future so that the management can make a better decision.
- Performing follow-ups
Follow-ups are an important part of every business. After an audit is conducted and analyzed and a plan is developed, the management should again revisit the analysis to understand the deviations made. A follow up will reveal if the correct method was being followed or not.
The above mentioned five steps should be kept in mind by the management of a business while conducting the internal audit of a company. Adhering to these steps will help the business to ensure that the management conducts the internal audit of a business in an easy and straightforward manner.
To be completely on the correct side, the management should take the assistance of a financial firm that provides internal audit services. If you are looking for such services in the UAE for your business then you must have a look at the services provided by JAXA Chartered Accountants.
JAXA Chartered Accountants is one of the top audit firms in the UAE and will provide the best possible services to its clients. The experts at Jaxa will understand the clients business and will provide a customized solution so that the business can use all of its potentials. For details about the services provided, feel free to Contact Us. We will be happy to assist you in your business journey.