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Definition of External Audit
An external audit is a detailed examination of a company’s financial records conducted by an independent auditor to verify whether the financial statements are fair and accurate. It provides a true representation of the company’s financial status and ensures compliance with regulatory standards.
The external audit is mandatory in the Free Zone for license renewal, obtaining bank facilities, ICV certification, and attracting investors. The main aim of external auditing is to boost accuracy and integrity. External auditing helps to check the financial book of accounts and assess the company’s processes, identifying fraud, errors, or mismanagement.
In External Audit in UAE, the guidelines are framed in UAE Federal Law No.2 of 2015 also known as Commercial Companies law.
External Auditing helps businesses maintain credibility, identify errors and irregularities, and ensure transparency.
BMS Auditing is one of the top auditing firms in the UAE. Our auditors provide reliable and quality external audit services in Dubai and the UAE. Our professional external audit services across the UAE assist businesses of all sizes in verifying financial records for precise, transparency while staying compliant with UAE regulatory standards.
This blog delves into the benefits of external auditing and why you should partner with us.
Key benefits of External Auditing
- Strategic decision making: The external audit reports help top management to make strategic decisions for better business operations enhancing business growth and optimum performance.
- Identify errors and fraud: The external audit helps to identify errors, omissions, mismanagement, and fraud in financial records.
- Comprehensive report: An external audit provides a comprehensive verification of financial records and helps to assess business operations.
- Guaranteed compliance: An external auditor ensures that books of accounts are according to the accounting laws and regulations.
- Internal Control Measures: An external auditor helps to evaluate the internal processing of a firm for the formulation of strategies for both short and long-term optimum operational efficiency.
- Increased Credibility: The audit report gives a true and accurate representation of a company’s financials which helps enhance credibility and ensure financial integrity.
- Identifies Weaknesses: An external audit report can help in monitoring the weaknesses in existing accounting and other financial processes and help to mitigate inaccuracy.
- Helps Bring More Investors: An external audit report provides the analysis of past and future financial records and the auditor can assess if the company is on profit then he can decide to invest more in the company.
Let us hop on to the reasons why external audits are crucial for business in Dubai:
- Authority and bank compliances
- Helps to build shareholder's confidence
- Enhances the company's credibility and reputation
- Prevent risk by identifying fraudulent activities
- Provides long-term benefits by enhancing strategic decision-making
- Enhances business performance by aligning with industry standards.
External Audit Requirements in UAE
In UAE, external audit is a mandatory component to ensure most businesses align with UAE regulations. In the free zone, external audits are mandatory. Certain branches or foreign companies do not need to follow external auditing requirements in the free zone. Here are the key points
- Businesses must maintain organized financial records as per UAE Federal Law No. 2 of 2015.
- The UAE commercial companies Law mandates to maintain financial records for at least 5 years.
- External audit is often required in the free zone for license renewal. External audits are mandatory in most major free zone authorities such as DMCC, DAFZA, DIFC, DSO, and DDA.
- Businesses are given a period of 3 to 6 months after the financial year ends for the completion and submission of audit reports.
BMS Auditing provides robust external audit services for UAE businesses so that clients can focus on business growth and expansion.
Documents Required for External Audit
To ensure an accurate external audit report, an external auditor mandates a few documents such as:-
- Details of Fixed Assets: Fixed asset details include the invoices, receipts, or asset registers of the asset purchased by the company, This is needed for preparing the company’s balance sheet or financial statement.
- Bank account information: An external auditor can assess the financial flow in the company
- Payroll records: Payroll records help auditors evaluate the salary distribution, tax liabilities, and employee expenses.
- Loan Documents: The details of company loan documents help to assess the accuracy of payment exposure.
- Ledger and Trial Balance: It helps ensure financial records' accuracy.
These documents help to ensure smooth external auditing procedures while adhering to UAE compliance standards. This list of documents may vary depending on the business activity or the business model.
Reason for Hiring an External Auditor In UAE
It is mandatory for companies registered in the UAE to have an external audit. An external audit is invoiced as a crucial examination of the book of accounts adhering to International Financial Accounting Standards(IFRS) and Generally Accepted Accounting Principles (GAAP). So here are the main reasons for choosing an external auditor in UAE:-
- Mitigate financial risk
- Helps to assess the financial status
- Accurate financial insights
- Boosts business credibility
Why choose BMS Auditing for External Auditing Services?
BMS Auditing is a certified external auditor in the UAE providing a wide range of external audit support. Our team of professionals is equipped with knowledge and expertise in providing tailor-made auditing services in the UAE.
Partner with BMS Auditing:-
- Best external auditors on board
- Proven track record
- Cost-effective
- Guaranteed Compliance
If you need any help regarding external audit services, just reach out to us for smooth auditing services.
Partner with BMS Auditing, who will work closely with you for stress-free external auditing services in UAE.
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