We all know and understand the importance of Auditing for your company. However, the management should look at the size of the business. An audit will provide more profound and accurate details for any of the company not taking into consideration the size of the business. Auditing services will be as suitable for an MNC as they will be for an SME.
Auditing can prove to be very important as it will help both the company's management and the investors of the company by providing accurate and correct information. However, many Small and Medium Enterprises (SME's) think that their business does not require these auditing services as the enterprise is small in size. But this cannot be farther from the truth.
Why do Small and Medium Enterprises (SME's) need financial Auditing?
It has been deemed mandatory for all companies to appoint an Auditor for the company licensed with the Ministry of Economy (MoE). This is according to Article 27 of the UAE Commercial Law No. 2 of 2015. Here are some of the conditions under which the companies should conduct Audits.
- Requirement of the Management
Many small and medium businesses do not avail of a full-time CFO or any other auditing services. This is because the management feels that the industry is small and does not require such in-depth services. But to achieve precise and accurate financial information about the company, the administration should conduct an audit of the company.
Such business owners employ a bookkeeper or an accountant to oversee all the financial transactions and maintain the company's day-to-day accounts. But from time to time, they would require the services of an auditor to navigate the treacherous waters of the business environment.
The business can either avail of a full-time auditor for the company or could even utilize the services of an outsourced auditor. The SMEs have to take care of the expenses, and the management should look into using outsourced auditing services.
- Legal Requirements
The Government of the United Arab Emirates has also levied specific legal requirements for companies in the country. These areas are below:
- Company Liquidation
The investors and management need to know about the company's financial information before the liquidation process starts. This information is provided in the auditor's report, which has to be provided by an auditor after the company's audit is done.
- Branches of Foreign Company
If any branch of a company is formed in the United Arab Emirates, then in such a case, the branch company must submit the company's audited financial statements.
- Free Zone Companies
There are several Free Zones available to a business in the United Arab Emirates. These free zones provide a very suitable business environment for a business. One of the changes made by the free zone authority is that the companies must provide audited financial statements to the relevant authority to renew the business license.
- Requirements of the Lenders and Suppliers
Audited financial statements of the company are required by both the lenders and the suppliers so that they can understand the company's present situation and accordingly take a decision regarding the future.
- Identification of Weakness
With the use of auditing services the management will be in a better position to understand the financial condition of the business and will also be able to predict any future trends the company may face. The management will also be able to find if the business is facing any bottlenecks or weaknesses.
These are some of the reasons due to which not only the MNC's but also the SME's must audit services so that the companies face no problem in the future. Auditing services should be used by all companies to receive proper and accurate information about the company.
Looking for such auditing services in the United Arab Emirates? You can have a look at the services provided by JAXA Chartered Accountants. There are many different services offered by JAXA which will assist your business journey. For more details about the benefits, feel free to Contact Us. We will be happy to assist you.