Managing finance is one of the most crucial tasks that every business entity needs to go through. A common question that keeps arising in the minds of an entrepreneur is: Is financial audit mandatory? Do the financial reports needs to be submitted to the authority? Well, the reason behind the existence of such a question is based on the mindset that a financial audit is done only by big organizations. Be it a big, small business in Dubai, handling finance is a must. Now, the procedure doesn’t come to an end only by managing it. A financial audit is considered to be a compulsion to trace out the proper utilization as well as to measure the financial stability of a business. According to the UAE Commercial Companies Law, and Financial Audit Department, every company should appoint auditors to audit their books. This article will give you a clear idea as to why the financial audit serves to be a boon for SMEs.
SMEs’ Books of Accounts Audit
With a question of whether to perform a financial audit or not, SME’s often end up auditing their financial auditing books in the following circumstances:
1. Legal Requirements
When it comes to renewal of trade licenses, certain free zones in Dubai makes it a mandate to review the books of the audit. Another scenario that leaps around the legal requirements for the books of audit includes a branch of a foreign company, liquidation of a company, government authorities, etc.
2. Management Purposes
It becomes necessary to audit the finance books to evaluate the company’s performance, to update daily activities, to plan regarding further investments, etc.
3. Third Party Requirements
When it comes to business expansion, banks and other financial institutions do require the books of accounts to understand the credit rating of a business entity.
Getting the books of accounts audited is a beneficial process. Moving ahead, let’s have a glance at the benefits that an SME derived by opting for financial audit.
Benefits of Financial Audit for SMEs
A small enterprise can get the financial audit done and can utilize the same statements for its growth. Confused? Well, the audited financial statements present the insights of an organization. Summarizing the report, an SME can:
- Understand and rectify the financial issues
- Uncover fraudulent activities, if being performed
- Improve the tax planning
- Strengthen the credibility of a company’s financial records
- Develop better financial strategies for further expansion
Every business starts growing by following and rectifying the mistakes that it does at the initial stage. In order to rectify them, one must get an audit done through professional experts so that they can get a transparent picture. Professionals are expert in auditing and will be a better guide to help you in rectifying the issues. If you haven’t initiated the financial audit process for your SME, then get it done. This step can transform your business entity’s future to a great extent. To help you in proceeding ahead, JAXA is here.
