Many times businesses may take certain freedoms while conducting business. These freedoms on the part of the business may lead to harm to the economy of the country. In order to prevent such harm, the government takes steps, and one of the measures is to Audit the company. This type of Audit which has been mandated by the government, is known as a Statutory Audit.
First, let’s understand what statutory Audit is.
Statutory Audit: Meaning
A Statutory Audit can be understood as the examination of all the financial statements of a company. This audit has been mandated by the government to examine if all the necessary procedures are being followed and no type of fraudulent activity is being followed. The statutory audit is the governments’ way of keeping all things in check and ensuring that it doesn’t face any harm in the future.
In the United Arab Emirates, the statutory audit is usually conducted related to the Board of Directors of the company or the administration of the company. The audit must be conducted in accordance with International Financial Reporting Standards (IFRS).
Steps to prepare for Statutory Audit
If the company management has been alerted that the Federal Tax Authority (FTA) themselves will be conducting an audit of the company, then it is suggested that the management should avail the assistance of a reputable firm that will help prepare for the times ahead and will also ensure that no problems are being faced by the business.
The following steps should be implemented by the management to prepare for a statutory audit:
- Keep Track of the Company Finances
The financial records of the company form the basic bloc of the company, and all the information about the company can be found in these records. This is why it is very important for a company to maintain all the records of the company. These records should be maintained in something of order so that there is no problem in the future and the management does not scramble around to find all the records.
- Make a list of the questions which can be asked.
If the management conducts a review of the company before the audit is done, they will be able to find out the area of interest. The team from the FTA will be focusing more on this area, and knowing this, the management will be able to expedite the statutory audit.
- Keep all the Necessary Documents at hand.
The auditing team from the FTA will require the management to prepare certain documents of the company. This is why it is suggested that the management should keep all the documents prepared beforehand. Some of the documents which are requested by the FTA are as follows:
- All the Receipts and Statements of Banks – The management should present all the receipts and statements so that it is easier for the auditing team to conduct the audit in a quick fashion.
- The Journals and Ledgers of the Company – The books of accounts should be properly maintained by the management. These documents will help the audit team to conduct the audit more smoothly.
- Keep and Maintain all the Records of the Equipment – in order to conduct the daily business activities, and the company needs to use certain equipment which will help in these activities. All the records of such equipment should be made available to the auditing team.
- E-Records of the Company – With the increase in technology, the records of a company are now stored in the form of electronic records. All these records should be made available to the auditing team.
The company should avail the services of a reputed firm so that all the business records are kept in proper order. The smallest of error can cause a huge problem for businesses. If you are looking forward to a statutory audit in the UAE, then JAXA Chartered Accountants will be able to assist you in preparing for the audit.
JAXA is a reputed Chartered Accounting firm and holds an experience of over 13 years in the field of finance. It will take care of the company and prepare it well for the statutory audit. For more details on the services provided by JAXA Chartered Accountants, feel free to Contact Us. We will be happy to assist you.