Tips to Prepare for Financial Audit
13

Dec 2018

Finance is the component that drives a business entity to perform its activities. It is the domain that keeps a check on the financial flow as well as project the sustainability and growth prospects of the organization. Any business entity must perform ‘audit’, which means a cross-check and supervision that takes place at the individual department as well as the organizational level. A financial audit is performed by the finance department to check that all the business transactions are legalized. If you hold a business, it becomes a necessity to go for financial audit. The audit process requires certain prerequisites that need to be done. In this article, you will get a few useful tips that one needs to follow before initiating a financial audit. Let’s proceed…

Key Tasks before the Audit Process

  1. Communicate the finance track plan to the employees
  2. Align the accounting and reporting statements
  3. Take an account of all the fixed assets
  4. Keep a digital record of all the statements
  5. Correctly categorize the expenses
  6. Close books each month

To perform the audit process, it becomes necessary that you provide all the essentials to the auditor to carry the process in an easy manner. Have a look at the below documents which you need to keep handy.

Audit Preparation Checklist

  • Up-to-date general ledger
  • Trial balance
  • Audited financial statements
  • Bank statements, accounts receivables, inventory, and other subsidiary accounts
  • Statements of priced inventories, fixed assets (after depreciation)
  • Schedule of prepaid expenses, loans, trade payables, and other liabilities
  • Schedule of accrued liabilities
  • Corporation minute book
  • Stock certificate book
  • Bank statements, canceled checks, invoices, insurance policies

Once the essentials have been provided, the audit process begins. Now, let’s have a look at the different steps or phases of a financial audit process.

Phases of the Financial Audit Process

The different phases of the financial audit process are as follows:

1. Planning

This step includes collecting data to get an idea regarding the company’s financial stability.

2. Internal Controls

All the essentials need to be submitted accordingly to give a statement regarding the financial scenario.

3. Testing

It checks whether the internal controls are working or not. It helps to identify the loopholes and rectify them accordingly.

4. Reporting

It gives a final call on the financial performance of the business entity, and also depicts how the company adheres to the financial standards.

Benefits of Financial Audit

  • Shareholder’s feel a sense of comfort by having a look at the company’s financial position
  • Company’s performance gets highlighted
  • The chances of acquiring current and potential investors increases
  • It plays a great role in tax-saving
  • It opens a wider opportunity in case you want to sell your business
  • Audited financial costs can reduce finance costs

Thus, you can see that the audit of financial statements turns out to be an essential process, but at the same time it involves complexity and is a time-taking process. To make it easy and convenient it is advised to outsource the financial audit process to professionals who have an in-depth knowledge regarding the financial audit process in Dubai. Confused whom to approach? Don’t worry, we have your solution.

JAXA

JAXA has been one of the top audit firms in Dubai. We primarily focus on delivering tailor-made solutions to our clients in multiple domains including accounting, taxation, audit, business establishment process etc. Our business experts are well-experienced and will help you in conducting the financial audit for your company. To know more, do contact us– we’d be happy to assist.