23
Feb 2021
The importance of a financial audit cannot be underplayed by anyone, and the most common type of Audit which will be conducted by any business is Statutory Audit. This type of audit is an audit of all the financial books of accounts of the business which have to be performed legally. This type of audit is performed by the top officials of the company management, namely the directors or the managers of the company.
The companies which are set up and registered in the United Arab Emirates should have a statutory audit of the company and should follow International Financial Reporting Standards (IFRS). To know more about the International Financial Reporting Standard, you can refer to our previous blog titled “Advantages of Adopting IFRS in the UAE “.
Importance of Statutory Audit
There are many different objectives of an audit, such as the following:
- Detection and Prevention of Frauds and errors
- Preparation for a future path for the company
- To generate the confidence of the investors.
The statutory audit helps in understanding the present financial condition of the company and also depicts the fair and accurate assessment of the financial statements of the company. With the present information, the investors of the company will be able to generate and retain confidence in the company.
The statutory audit will also help the management of the company to understand the working of the business and develop a future path for the business so that the business is more efficient and profitable.
The Procedure of Statutory Audit
A statutory audit is usually performed when the concerned authority gives the order to conduct an audit of the company. If you want to conduct a statutory audit of your company, then you can refer to the process of conducting the statutory audit which is given below:
1.Going through the Internal Audit report
The first step should be to go through the internal auditors report to get a fair picture of the internal workings of the company as well as the financial books of the company.
2.Report all the Conflicts Mentioned
The internal audit report will report inevitable conflicts and also provide specific solutions which will help the company be more effective and profitable. The present auditor should take all these suggestions into consideration and should also ensure that these points reach the management of the company.
3.Go through the previous Statutory Audit report.
The previous statutory report will provide deep insights into how the company was previously ranked and will also provide assistance in developing the statutory audit report of the company.
4.Understand the Accounting and Auditing software used by the Company
Many companies utilise accounting and auditing software which will help the companies to record and maintain the information of a business. There are much different software’s to choose from, and it is the duty of the auditor to understand the accounting and auditing software’s and how they work.
5.Understand about the Cost and Expenses approval
The next step which the auditor should take is to understand how the goods and services are priced and what are the expenses which are associated with the business functions.
6.Clarify the Company Policies about Marketing, Sales and the Partnerships
Every company has different policies about marketing, sales and has different partnerships. The auditor should find out more about them so that he can provide accurate and dependable solutions.
7.According to the Company, find more information.
The above-given list of steps is not a complete list. Each business has different business activities, and it is the duty of the auditor to understand the workings of the company and if required analyse more avenues of the company to find out more information about the company.
If the management of a company follows the above-mentioned process, then the management will be able to conduct the audit in a comfortable and clean manner. The above list is not comprehensive, and the auditor should add more steps in the statutory process to achieve the complete and desired result.
To understand more about statutory audit and how it can benefit your company, you can learn more from the experts at JAXA Chartered Accountants. Feel free to Contact Us. We will be glad to assist you and your company to new heights.