Setting up and conducting a business has become easier for everyone, primarily due to the increasing reach of the internet and the governments of the various countries understanding the need for business and their impact on the economy. As a result, there has been a significant increase in the number of companies that have been established in the UAE in the past few years.
Small and Medium Enterprises form a significant chunk of the economy, and thus it will not be wrong to call them the backbone of the Country. Every business must be vigilant and have complete knowledge of what is happening in your business as this information will be crucial for understanding the future of the business or if any changes have to be made.
One of the favorite locations for setting up a business in the United Arab Emirates is one of the numerous Free Zones, which provide several benefits to the company both during the incorporation as well as during the business journey. But the businesses must keep in mind the various requirements for setting up a business in the jurisdiction. For example, one of the most considerable requirements for company incorporation is conducting mandatory Financial Audits.
Let’s understand the various reasons why conducting a financial audit on a periodical basis is very important for a business.
Importance of Financial Audit for a Company
Here are some of the reasons due to which conducting a financial audit is very crucial for business in the United Arab Emirates:
- Provide complete and correct financial statements to the concerned authority
In order to know the current financial situation of the business, it is necessary to have access to the accurate and correct financial data of the business. By conducting an audit the management of the business will be able to check if all the required accounts are prepared or not. The auditors will also check for errors in the financial data and will provide a method to rectify these errors.
- To be able to make better decisions for the future of the company
Decision-making plays a very vital role in the life of any business. With access to accurate financial statements, the management will be in a better position of making decisions for the company. It will also be able to analyze the trend of the business and accordingly take decisions for the future of the business. In the long run, it will impact the business performance and will also be responsible for any deviation in profits or losses.
- To tackle any present or upcoming risks
Every business has to face some risk at some time. Auditing all the financial documents will allow the business management to understand the present and potential risks faced by the business. The management of a company should avail the assistance of a reputed audit and accounting firm so that they can receive the most accurate financial information.
- To increase the trust and confidence of the Investors
A business requires the assistance of its investors to grow and develop. Conducting the audit of the company on a periodic basis will help increase the trust and confidence of the investors (both present as well as potential) as it will increase transparency and flow of information to and from the business and investors.
- To ensure compliance with all the rules and regulations
In today’s world, it is very important for a business to endure that it is maintaining compliance while preparing various financial statements. There have been many new and different regulations in the last couple of years such as the Anti Money Laundering Act (AML), Economic Substance Regulation (ESR), and various others which will have a huge impact on the profitability of a business.
These are some of the reasons due to which it is important for a business to conduct an audit of the financial statements of the business. The management should take the assistance of reputed professionals who can help the business in its growth and development. If you are looking for such services for your company then the services provided by JAXA Chartered Accountants can be very useful for you.
The experts at JAXA Chartered Accountants will first understand the requirements of your company and accordingly provide the necessary solution for the business. JAXA also provides various other business services such as Accounting Services in Dubai, Auditing services, Vat and Tax related services, and many more. For more details about the services, feel free to Contact Us. We will be happy to help.