The foremost purpose of a business is to maximize the profits for its shareholders’ while fulfilling its corporate social responsibility. In the long run, it is possible that these profits start to reduce and the company requires a complete review of its overall workings. This comprehensive assessment would be done by a third party and would allow the management to understand where the fault lies in the business mechanisms and take decisions to make the required changes. This process is known as the auditing of a company.
Many people think that the auditing process is just a waste of time and resources, but this could not be far from the truth. The scope of auditing has enormously increased, especially in a place like UAE, because of the increase in the number of growing businesses in the Middle East area. This has also created enormous demands for accounting firms in Dubai and the adjoining regions.
Let’s have a more in-depth look at auditing and how it can lead to better decision making.
What is Auditing?
Auditing is a process in which an independent person or a body of persons who are expert and qualified, cross-check all the financial record and books for any discrepancies and inconsistencies in the finances of the business. The primary purpose of conducting an audit is to confirm that all the transactions recorded in the books of the business are authentic. The audit report provides a precise and complete picture of the financial health of the company and helps in deciding the future course of the business.
How Does Audit help in Better Decision Making?
Audits can provide a complete 360-degree view of the company and would allow the management to understand the potential bottlenecks of the company well in advance. The auditing process would help in better decision making by:
1.Identifying the Issue
The audit process will provide the administration with the complete view of the business and its transactions allowing them to figure out the loopholes and the bottlenecks of the business. This would help in pinpointing all the problems that the business could be facing and it would also help in securing the future of the business.
2.Providing all the Data at a Single Location
This comprises of critical assessment of the various books of the company such as memorandums, contracts, minutes of the meetings and external information etc. Gathering all the data related to the problem would help to understand the gravity of the situation and also the various implications of the problem. This would also help in filing for taxes in the future.
3.Providing Solution and Alternatives
Since all the critical data will be available at a single spot, this would help in finding a solution to our issue reasonably quick. Also, various alternative solutions can also be developed which would give us the option and flexibility to choose the one which is most suitable to the requirement of the business.
4.Making Better Financial Planning Decisions
An audit would enumerate all the monetary transactions that a business performs. Analysing this cash flow would help the management to understand how much of the finances it needs to invest in which place. This would lead to better lending and borrowing decisions from the company’s side.
5.Providing room for Expansion
The audit would provide a clear and concise understanding of the status of the company. According to the health of the company, the management can decide it wants to go for a steady expansion of the company or should they wait and make the company stronger in terms of all the resources.
6.Providing a Ground for Better Security
An audit can also play an essential part in uncovering any fraudulent activity is happening in the business. A fraud investigation audit can be conducted to find out the occurrence of any fraudulent activities, and the management can take the necessary steps to curb such activity.
Thus, we can deduce that performing an audit is a vital process to figure out the financial status of the business. The advantages mentioned above make it very beneficial for a company to conduct an audit as it will lead the management of the business to take better decisions which would guarantee the future existence of the business.
If you are looking for a reputable auditing firm in Dubai, then JAXA will be a perfect companion for you. We at JAXA provide you with various services such as Auditing, 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.