BMS Auditing provides comprehensive company liquidation services in the UAE, including liquidation audits, asset management, and ensuring fair distribution to creditors and stakeholders, ensuring compliance and smooth business closure.
Liquidation is the process of winding up a company's activities systematically and managing its assets. The liquidator supervises the conversion of assets into cash during this process, taking care to address all matters. After doing so, the liquidator will apply to relevant bodies, such as Companies House, to formally dissolve the business, bringing its legal existence to an end.
The goal of liquidation is to meet financial responsibilities, increase the value of the available assets, and give notice to those with a business interest. Sale proceeds meet outstanding liabilities, but when there are surplus funds they are returned to the creditors and shareholders as allocated a priority.
When everything else has been liquidated legally speaking, the company stops existing.
Reasons to Liquidate
The most common causes for the liquidation of a company include poor funding or cash flows. A business that lacks sufficient revenue for payment of expenses or servicing loans will be left with no option but to close down. Liquidation is necessary in this case because it leads to a means of dealing with debts and protecting the interests of creditors and stakeholders.
What is a Liquidation Audit?
A liquidation audit, therefore, is a process of reviewing every financial transaction that occurs with a firm during its liquidation. It would verify the legality and validity of these transactions, most especially costs incurred in assets liquidation, revenues accruing from the sale of assets, and fair treatment of proceeds. The benefits of an audit are transparency, accountability, and compliance with legal requirements wherein assets are used to their fullest extent to pay obligations, and cash distribution is balanced between all parties involved.
Purpose of a Liquidation Audit
Audits in liquidation are pertinent for proper closure and hence might be required for seeking a certificate of closure for a Company. These are to reflect in a company's assets as well as liabilities so the creditors will have no pretext to raise objections on behalf of liquidation. Liquation audit is the auditing of assets for the cause of liquidation of all those assets to generate liquidity to pay off the Liabilities. In this matter, there is a requisite of maintaining proper and exhaustive documentary evidence for the liquidator. An audit after having been done post-liquation ensures proper distribution with proper allocation of assets besides their appraisals which can help to eliminate creditors' apprehensions over decision taken by the liquidator by providing equitable distribution of money.
Auditor's Role in Liquidation
Equity shareholders have a very marginal return in a liquidation situation. This will be after providing due share to other stakeholders and the creditors, ensuring a fair distribution mechanism. In the case of insolvent firms, auditors can advise the right distribution of resources. The auditors check if all distributions were done legally to ensure the best returns for all concerned parties. The audit report given by the auditor is detailed as it gives complete financial information to the liquidator. All the assets are liquidated and then distributed among the creditors or other obligations in the various stages of the process.
Your Liquidation Audit Partner
At BMS Auditing, we prepare detailed liquidation audit reports that are submitted to the relevant authorities for company registration. Being a well-known firm, we have a network of associates in the UAE. Our skilled liquidators and sought-after corporate liquidation services make us a leading accounting and auditing firm committed to supporting your business through the liquidation process.
We are here to speak with you today about all sorts of UAE-wide and international liquidation audits.
