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Enhancing Audit Quality through
effective application of Auditing Standards
Audit Firms in Dubai and Other Emirates of the UAE
The world’s best businesses can barely wait to expand into the United Arab Emirates! There is so much opportunity here that Multinationals are just lining up, waiting to find their chance to break into the market. They recognize a fair and level playing field when they see one. Every company seeks an advantage over its competitors—it’s only natural—but it should never be because the law is applied differently in each case. In the UAE, all the businesses follow the same rules, and one of the most important has to do with financial record keeping, reporting, and auditing.
Every company wishing to conduct business in the UAE is subject to an annual external audit of their Financial Records by one of the qualified audit firms in Dubai or any other Emirate of the UAE. The reasoning behind this is that it maintains transparency and assures compliance with applicable regulations. Getting your financial statements audited is not only important due to regulatory requirements, but it is also important due to the need to have an independent check on the performance of the company as well as its staff. We all have seen several billion dollars companies liquidate due to misappropriation in the financial records. Somehow or the other, one of the main reasons behind those liquidations was either no financial audit at all or a fraudulent audit of the accounts. It is therefore essential to not only get your accounts audited regularly but also ensure that you engage with the best audit firms to avoid fraudulent audits.
Briefly, an audit becomes mandatory due to the below reasons:
- Regulatory requirement
- Your company is listed on the stock exchange
- Your sleeping partners need an independent audit company in Dubai or any other Emirate of the UAE to review the company accounts
- You get into a dispute with your partners or shareholders and they want an independent financial review of the books of accounts
- You need to submit your audit report to Banks so that your bank facilities can be renewed
- You have to submit the audited financial statements to the free zones in order to get your licenses renewed
- Some customers demand audited statements before they commence business with you so the audit becomes essential here
- And honestly, there are many more reasons…
The UAE’s Best Choice for Every Type of Audit and Assurance Services
Push Digits Chartered Accountants a leading Audit Firm in Dubai, with more than two decades of experience in audit and assurance services. We have covered every industry in our auditing practice. We are registered with all of the Banks, Government Authorities, the RERA (Real Estate Regulatory Agency), as well as all of the Free Zone Authorities. This means that we can provide all necessary services, for the widest possible range of clients, for all of their External Audit requirements.
Below are some of the very common auditing and consulting assignments we perform on a regular basis for our local as well as international clients:
It involves an examination of an entity’s financial statements by an independent third party. It is usually conducted by businesses for statutory reasons. However, a business that is not required by laws and regulations to have its financials audited may still get an audit done to provide assurance to its stakeholders that information presented in its financial statements is reliable and presents a true and fair view. Also, UAE banks require audited financial statements from approved audit companies based in Abu Dhabi, Sharjah, or mostly from Dubai audit firms before they award/renew bank facilities for their customers.
We have customers from every possible industry. Be it banking, complex manufacturing, trading, aviation, entertainment, or construction, we exceed our clients’ expectations and you will be impressed too.
An internal audit involves the evaluation of an entity’s internal controls including its accounting processes and corporate governance. The purpose of these audits is to ensure compliance with relevant laws and regulations as well as helping the senior management by providing them with information regarding the company’s control environment, risks, and operational effectiveness. In other words, internal audit is used as a tool by companies to assess their performance or execution of their processes against certain standards, metrics, policies or regulations. An internal audit department whether in-house or outsourced is responsible for carrying out regular internal audits throughout the financial year. This helps the companies in improving their operational efficiency by identifying and addressing issues before they are discovered in external audits.
When you hire us for internal audit services, our objective is to add value, reduce costs and improve the efficiency and effectiveness of your business operations. We can help you in achieving your objectives and becoming more successful. We use a combination of technical knowledge and consulting experience to assist our clients. Our services include providing an entity’s senior management with information that is critical for improving the efficiency and effectiveness of its existing systems and processes. We are known for providing quality internal audit services to companies operating in every possible sector.
A forensic audit can be defined as an audit that involves an examination of an entity’s accounting records to find evidence regarding possible fraud or illegal activity, which can later be used, if required, in a court of law. Most accounting and audit firms have a separate department that oversees forensic/investigation audits. These audits not only require expertise in accounting and audit processes but also demand in-depth knowledge about the legal framework that is to comply when conducting such audits. Forensic audits cover a variety of investigative activities. A forensic audit may be carried out to persecute an individual or an entity for embezzlement, fraud, or other types of financial crimes.
The process of a forensic audit is similar to a traditional financial audit which means it involves planning, gathering evidence, and writing a report with an additional step of a potential appearance in court. Usually, the level of testing on transactions and accounts in a forensic audit is more detailed when compared to a traditional external or internal audit. Sometimes, the extent of testing can be 100%.
Our forensic examiners work on the basic principle that ‘In every detail, there is yet another detail’. Our forensic auditors have conducted hundreds of forensic accounting/audit assignments within and outside of the UAE. We have conducted investigation audits in supermarket chains, restaurants, construction and real estate companies, trading companies, manufacturing companies, and a lot of process-based assignments such as a 100% audit on the bank withdrawals.
A tax audit basically involves an assessment of whether an entity is complying with all the applicable tax rules, laws, and regulations. In other words, this type of audit is conducted by the Federal Tax Authority (FTA) with the main objective to ensure that an entity collects VAT from its customers and submits it to the tax authorities on a timely basis. In addition, it is also used as a tool for assessing whether an entity is complying with all the relevant tax laws applicable in the UAE such as VAT laws and Excise Tax laws.
When it comes to tax audits in UAE, our team of qualified tax practitioners can help you in preparing your business for tax audits by the FTA. We have developed a tax review process which we use when preparing businesses for a tax audit:
- Review of an entity’s existing VAT system;
- Review of VAT calculations;
- Review of an entity’s VAT returns;
- Compare figures reported on VAT returns with figures appearing in the entity’s accounting ledgers; and
- Review of payment of output VAT made by the entity.
- Overall compliance of client’s business with the applicable articles of the VAT law
Gross Turnover Audit/Sales Audit Certificate
A gross Turnover Audit involves verification of an entity’s gross revenue for a particular period. The accuracy and completeness of revenue is checked in detail by auditors and then a sales certificate is provided to the company. This certificate is generally required by almost all the property management companies in the UAE from their retail tenants.
This is a general practice by all the major Property Management/Mall Management companies that charge rent on the basis of the sales certificate. The revenue needs to be verified and audited by a Mall Management approved auditor.
It involves a review of an entity’s cost accounts to not only verify its correctness but also to check that cost accounting principles have been properly followed during the preparation of these accounts. Simply put, a cost audit can be defined as a tool used for verifying cost accounts and checking whether these accounts have been prepared in accordance with the cost accounting plan.
Without a thorough cost audit, areas of weaknesses can be left unchecked. Unaccounted inefficiencies and hidden losses will eventually have a negative impact on a company’s financial health. Therefore, it is important for manufacturers especially FMCG manufacturers to conduct audits of their cost accounts preferably by an independent third party at least on an annual basis.
Over the years, Push Digits has conducted multiple cost audits of both public and private sector organizations operating in the UAE as well as other parts of the world. Irrespective of the industry in which you operate, our thorough cost audit services will ensure that the information presented in your costing is accurate and your accounts have been prepared in line with your cost accounting plan.
A stock audit is an audit in which an entity’s inventory assets are physically counted/verified with system records. Every business having inventory should conduct an audit at least once a year to ensure that there is no difference between stock appearing in its accounting software and the stock which is physically available at its premises or warehouse.
A stock audit helps businesses in classifying stock into the following categories:
- Fast-moving stock;
- Slow-moving stock;
- Damage stock;
- Dead stock; and
- Obsolete stock.
Such classification helps entities in making decisions that can have a positive impact on their profitability. It also helps businesses in reducing costs, preventing pilferage and fraud and improving inventory management processes. All around the world, stock audits are considered as a good tool for managing inventory assets.
Our audit firm is well-versed in performing quality stock audits both in the UAE and other parts of the world. We provide our clients with stock audit reports that contain the following:
- Differences in stock appearing in accounting software and stock that was physically verified during audit;
- Classification of stock into the above mentioned categories;
- Control weaknesses in the inventory management process; and
- Recommendations to improve the inventory handling and management process.
A payroll audit involves an analysis of an entity‘s payroll policies, procedures, and records. Such an audit can be conducted for various reasons out of which some are listed below:
- To confirm that payroll information is up-to-date and accurate;
- To ensure that salary payable to employees are accurately calculated;
- To ensure the end of service benefits have been accurately calculated and accrued;
- To ensure that the entity’s payroll records and policies are is in compliance with all the relevant laws and regulations;
- To ensure that transactions and payments recorded in payroll ledgers match with the information appearing in an entity’s salary sheets and bank statements; and
- To ensure that the current status of employees is updated.
Conducting a payroll audit on a regular basis can help a business in the following:
- Preventing fraud by identifying ghost employees or mismarked time cards;
- Identifying manual errors when entering transaction details into an accounting software;
- Spotting calculation mistakes in case an entity prepares its salary sheets manually;
- Removing employees from payroll that have been terminated by the entity;
- Identifying employees that are eligible for a raise;
- Verifying deductions on salaries of employees are accurate; and
- Ensuring that the entity is compliant with all the relevant employment laws.
Over the years, we have gained invaluable experience when it comes to the audit of an entity’s payroll as we have conducted a number of payroll audits of businesses of different types as well as operating in different industries. Our experienced audit professionals conduct an audit of the payroll of businesses through the following techniques and methods:
- Verifying employees included on an entity’s payroll
- Verifying pay rates for each employee to ensure these are up-to-date and accurate
- Comparing pay rates of employees to their attendance records
- Ensuring that payment is only being made to active employees
- Cross-examining salary sheets (containing details of gross payroll expense, deductions, and net payroll expense) by comparing it with the records appearing in general ledgers
Financial Data Migration Audit
Financial data migration involves the migration of all the financial and operational records from your current accounting system to the new accounting system. The migration can either be done by transferring the audited balance sheet only or by transferring complete historic records of your business. In manufacturing businesses, the migration from one system to another system is considered the most difficult one.
We have performed hundreds of financial data migration audits. If you want to migrate the balance sheet item only, we perform the audit on the balance sheet items on a cutoff date and issue our report which contains an audited balance sheet. These balances are then migrated to the new system. In case you want complete historic data to be transferred as well, we extend our scope of testing and monitor and guide the migration team in each step. We oversee the entire assignment and once the migration is completed, we perform a pre-migration audit and post-migration audit in order to compare and ensure that the financial and operational reports from both systems are the same. Once all that verification is completed, a report is issued by us to mark the financial data migration audit as completed. Below is a brief detail about the pre-migration and post-migration audits.
Pre-migration audit basically involves examination and evaluation of the new storage or information system to assess whether moving data from the old system to the new one is beneficial and in case if it is beneficial then how it can be done in a way in which the above-mentioned risks can be minimized if not eliminated.
Post-migration audit involves checking whether all the data in the old system have been properly transferred to the new one and no data has been lost during the migration process. Such an audit is also performed to identify any compatibility or system performance issues.
A management audit basically involves analysis and assessment of the capabilities of an entity’s management in achieving corporate objectives. The purpose of such an audit is not only to appraise performance of individuals but also to evaluate the effectiveness of the whole of the management in working as a team to satisfy the interests of all the stakeholders, maintaining good relations with employees and upholding reputational standards.
A management audit is considered as an important tool for the continuous evaluation and appraisal of the methods as well as the performance of an entity’s management. The main objective of a management audit is to help an entity’s management in identifying its weaknesses and to help them in addressing them. Such an audit is usually carried out on a companywide basis but it can also be isolated to specific business divisions/segments. The ultimate goal of the management audit is to find out how effective the management is and how its performance can be improved.
We have extensive experience in performing management audits all across the UAE. Our management audits focus on the following:
- Critical evaluation of internal controls adopted by an entity and suggesting areas for strengthening;
- Review of existing business policies, practices, processes, and procedures with a view to recommending best practices;
- Constructive review of an entity’s operations by keeping the focus on the client’s business needs;
- Review of Risk Management Framework and its effectiveness with the objective of providing suggestions for strengthening the same;
- Identifying and recommending areas for revenue optimization, cost reduction, and improvement in operational efficiency;
- Providing result oriented and practical solutions;
- Confirmation of proper compliance with various operational manuals and regulatory provisions; and
- Assisting an entity in meeting its Corporate Governance requirements.
A compliance audit can be defined as an evaluation and assessment an entity’s adherence to external laws and regulations or internal guidelines, such as policies, controls, procedures and corporate bylaws. Compliance audits can also help in determining whether an entity is conforming to an agreement, such as when an organization accepts funds from government or other sources. Compliance audits are used for not only reviewing an entity’s compliance with laws and regulations related to financial transactions but also for reviewing compliance with quality management systems, HR laws, IT and other security laws, and other rules and regulations other than the ones mentioned above.
Simply, a compliance audit gauges how well an entity is adhering to laws and regulations, international and local standards, and even internal codes of conduct and bylaws. Part of a compliance audit may also review the efficiency and effectiveness of an entity’s internal controls.
Push Digits has performed numerous compliance audits for its clients operating in different industries all across the world. As a result, we have developed a team of highly qualified and experienced audit professionals that have a wide range of technical knowledge regarding rules, laws, and regulations applicable to different industries in various parts of the world.
Agreed Upon Procedures
An agreed upon procedures engagement involves the performance of procedures of an assurance nature on which no opinion and no assurance is expressed to the intended users. Instead, only details of factual findings obtained during the performance of the procedures are reported and communicated to the intended users.
In the context of agreed-upon procedures, we tailor our services to suit your needs, depending on the type of information involved, the level of reliability you need, and the expectations of the stakeholders to whom you are required to provide the information.
Mergers and Acquisitions Audit
Mergers and acquisitions (M&A) is a business term that is used to describe the consolidation of business entities or assets through a number of financial transactions including acquisitions, mergers, tender offers, management acquisitions, and purchase of assets.
There are mainly two types of M&A audits:
- Pre-Merger and Acquisition Audit
- Post-Merger and Acquisition Audit
Pre-merger and acquisition audit involves evaluation and assessment of the overall due diligence program in the context of an entity planning to either merge its business operations with another business entity or to acquire another business entity. Such an audit also involves evaluation of the impact of potential changes to an entity’s risk profile and related risk management activities prior to a merger and acquisition transaction taking place.
Post-merger and acquisition audits are conducted by businesses to ensure post-M&A integration and to track synergy capture. In other words, these audits are conducted to ensure that objectives of identifying an area of weakness or issues arising post-merger and acquisition transactions.
The objective of a system audit is to ensure whether an entity’s IT system including information system is safeguarding its assets, maintaining the integrity of stored data, supporting an entity’s corporate objectives, and operating in an efficient and effective manner. In other words, system audits are conducted by businesses mainly for evaluating the efficiency and effectiveness of their information systems in addition to verifying that information systems have been properly configured and implemented.
We have certified IT auditors that have years of experience in performing system audits of small and large business corporations operating in different parts of the world. Our system audit services include an independent and objective review of the infrastructure of the information system, control configuration, and regulatory compliance through detailed testing and analysis. During the process of system audit, we evaluate the overall effectiveness of our client’s overall IT control environment to ensure that these controls have been properly configured to preserve the availability, integrity, and confidentiality of critical systems and data.
The scope of such an audit primarily depends on the type, size, and scope of the client’s operations as well as the specific requirements of the client. Our team works directly with the client’s management to ensure the delivery of cost-effective auditing services on a timely basis.
A performance audit involves independent evaluation and assessment of an entity’s operations to determine if specific functions, programs or projects are working as they were intended to achieve stated objectives/ goals. Performance audits are usually associated with government institutions and departments at all levels as most government bodies receive federal funding.
The purpose of such an audit is to identify any area of weakness that is hindering an entity from achieving its intended objectives and provide recommendations to address the identified weaknesses so that an entity can achieve its intended objectives without any disruption and delay.
We offer comprehensive performance audit services designed to help businesses in identifying and overcoming critical challenges they are facing. We perform performance audits of businesses on the basis of a six-phase process:
- Perform risk assessment
- Devise an audit plan
- Conduct fact-finding
- Analyze financial performance
- Prepare findings and recommendations
- Provide draft and final report
In the Spirit of Fairness
This is not only necessary but essential, because each firm must have their financial results available for the various stakeholders, without any material misstatements. This applies to your competitors, too. Your report can be seen by each firm you wish to do business within the UAE, at their request, and your willingness to share this information with them. In the same way, you can request access to similar reports for each company with whom you wish to conduct business.
What is in the Report?
Audited Financial Statements include the Independent Auditors’ Report, Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements. Each item is of interest to various parties, but to some, the most important part is merely its existence and the final result.
Roles, Responsibilities, and Accountability of Auditors
Roles of Auditors
Auditors maintain the confidence of investors every day in Dubai and UAE markets. Their professional reputations, reliability, independence, and unbiased Audit Reports serve as the basis for this confidence. The result: a stable, reliable, and steady growth rate across the whole UAE.
The best Dubai audit firms, like our Firm, fulfill the role of independent professionals, providing assurance about the fairness and accuracy of the Financial Information of a Company. That reliability requires that the auditor report all of the facts accurately.
It Affects You
Your task is to find the best auditors available. They know how to ask the right questions; how to help you report information in the best light; how to make sure that valuable claims aren’t overlooked. If information is missing, they can help you to obtain it; if figures aren’t reconciling they can tell you where the problem arose and steer you towards finding that essential data.
Once they have all the information, their job is to report accurately, without influence. This is how your report can hold so much power with other business people and in your relationships with them. Shareholders, stakeholders, and other businesses must be convinced of the utter reliability of the report or they won’t choose to grant licenses, issue permits, invest, or do business with you at all.
It Protects You
External audits can also serve to verify the company’s operations are ethical and meet any legal requirements. This can help the company avoid any expensive investigations by government agencies or possible penalties. In today’s litigious environment, some people and groups are quick to file suit at any hint of management misbehavior or incompetence. External audits will defuse any such actions, or provide a valuable defensive tool in the event that action is pursued.
Responsibilities of Auditors
It is important to understand that external auditors do not prepare a company’s financial statements. Where a Company lacks a proper accounting function, then our Accounting Team of Push Digits can assist in preparing and compiling the Financial Statements for the Audit. The function of Auditors is to assess the veracity of the Financial Statements; to assure readers that what is stated is true and fair. They must be able to say that the company’s Financial Statements represent a fair and honest assessment, without any material misstatements.
In many cases, the fact that a company has received the highly sought-after and much-coveted Unqualified Opinion isn’t enough. Companies will still look to see which Auditing Firm provided the opinion and if those auditors were based in the UAE itself.
They want to know that the auditors are well-known for being up-to-date on the official standards and that they have a reputation for utter integrity. They want to be assured that the auditing company’s assessments enjoy wide acceptance.
Auditors also make recommendations for improvements in the company’s financial, operational, and strategic policies & procedures. These suggestions can result in an increase in the value of the External Audit, and in the company itself, as it becomes more efficient.
Accountability of Auditors
Auditing Firms in Dubai and other Emirates of the UAE are primarily accountable to the government authorities and their departments, such as the following:
- Ministry of the Economy (MOE)
- Accountants & Auditors Association UAE (AAA)
- Dubai Financial Services Authority (DFSA)
- Real Estate Regulatory Agency (RERA) for RERA Audits (e.g. Real Estate Projects and Owners’ Associations)
- Free Zone Authorities where the Audited Company is registered (e.g. Jebel Ali Free Zone, Dubai Airport Free Zone, DMCC, etc)
In addition, auditing firms are also accountable to the following stakeholders who are direct or indirect beneficiaries of Audit Reports:
- Shareholders of the Company
- Banks and Financial Institutions
- Customers, Suppliers, Employees
- the Audit Profession itself
- And, of course, Society-at-large.
Stakeholders of Audited Financial Statements
As mentioned earlier, there are many stakeholders of Audited Financial Statements of a company, including organizations, government bodies, and financial institutions who are directly or indirectly related to the Company’s business. These external audits are also available to public and investors, especially for larger organisations which are listed on the stock exchange.
In large companies, shareholders and management are insulated from each other, perhaps only getting together annually for a stockholder’s meeting. Most stockholders don’t even attend such meetings, preferring to sign a proxy for their voting shares so a company representative who represents their opinion can attend in their place.
Information to stockholders might be conveyed by ordinary daily news in the media, and an interim report, but most directly by Quarterly Reports and the Annual Financial Summary. But how do the stakeholders know these self-published results are accurate?
Like everyone else, they rely on the professional work of accounting and audit firms to provide a transparent and unbiased opinion of these Financial Results, and the assessment of Operations and Controls. This provides a clear picture of how Management has performed during the year.
There are many legal entities that have financial or authority relationships with a given company. These include suppliers, customers, employees, government bodies & departments, free zone authorities, banks & other financial institutions, and of course, investors.
Their concerns are manifold, such as knowing if a company is capable of paying its bills, and if they are capable of supplying their service or product as described by their business model. Their customers want to know that a product warranty will still be valid if they ever need to make a claim.
Employees need to know that their pay cheques will continue, and that their jobs are reasonably secure. They want to feel that the company they work for is reputable.
Governing Authorities must be assured that the company is working within the laws and meets the standards set for their industry. They need to know that the company is fulfilling its obligations. In cases of litigation, they must be confident that the company is doing its part to be a responsible corporate citizen. Only then can they issue licenses and other legal instruments in good conscience.
Free Zone Authorities grant licences to companies to operate within these zones, and they require external audits from every registered Company in any Free Zone. These must be conducted by approved accounting firms in UAE. In the event of liquidation or closure of a company, these Authorities also require the Liquidation Audit Report.
In terms of finances, the banks and financial institutions of Dubai and the UAE issue business loans for expansion, raising capital for new investments, or for mergers and consolidations. For this reason they are vitally concerned with the Financial Health of the company. An unsatisfactory external audit report could result in the withdrawal of financing.
Any worthy investor is going to consult with the external audit reports for a given company before placing any funds with them. Investing with a growing company planning to acquire another company, or perform a merger, will require a Due Diligence report that will strongly affect an investor’s opinion. Our reports guide thousands of investors to make wise decisions every day.
International Accounting and Financial Reporting Standards
These are the rules to be followed by accountants to maintain books of accounts that are consistent, reliable, relevant, and comparable to those found anywhere else in the world.
These standards were first issued by IASC (International Accounting Standards Committee) which existed from 1973-2001, thereafter replaced by the IASB (International Accounting Standards Board). These original standards, called the IAS (International Accounting Standards), were numbered IAS 1 to IAS 41.
Modern standards issued by IASB are referred to as IFRS (International Financial Reporting Standards) and include the first original IAS standards, but any time an IFRS standard contradicts an IAS standard, the IFRS supersedes the older version.
In Dubai, every Company preparing Accounts and reporting the Financial Results in the Financial Statements must comply with IFRS. Accordingly, the auditors have to check and give reasonable assurance as Audit Opinion that the Financial Statements are in compliance with IFRS.
The Four Types of Audit Opinion
Audit opinions must always be seen by the public as being uninfluenced and unbiased. Even a hint of impropriety diminishes the value of the audit opinion, rendering it useless.
It is vital to note that an audit opinion issued by an Audit Firm is not an opinion about a business’s operation or a recommendation for investment. The audit opinion concerns only the validity of the Financial Statements issued by the company being audited.
The Audit Opinion is only a reasonable expression from the auditors stating whether the Financial Statements represent the financial position and results of the Company fairly, without any material misstatements.
There are four types of Audit Opinion issued by the auditors in their Audit Reports. Let’s look at each one.
This coveted result, the unqualified opinion is often referred to as a clean audit opinion. This is the goal for every company audited because it opens so many important business doors.
An Unqualified Opinion is issued by Auditors when the Financial Statements give a true and fair view of the financial position and performance of the Company in accordance with IFRS (International Financial Reporting Standards). In essence, it means that the Auditors do not have any reservations with respect to any numbers or matters disclosed in the Financial Statements.
The Audit Opinion cannot be considered as an absolute assurance regarding the health or integrity of accounting records of the Company being audited but is a reasonable assurance that the Financial Statements present a fair and true view of the results of the Company being audited.
A qualified audit opinion is issued when auditors are not able to obtain sufficient evidence through auditing with respect to an account balance, a class of transaction, or a disclosure note, or if any of these have been materially misstated.
The Audit Report is then issued with an explanatory paragraph appended called the “Basis for Qualified Opinion”. This states clearly what has been the basis on which the Audit Firm has issued a Qualified Opinion.
In the case of a Qualified Opinion, the matter(s) for which Auditors have issued a Qualified Audit Report is not pervasive to the whole of the Financial Statements. The misstatement is related to only those matter(s) that have been stated in the Basis for Qualified Opinion paragraph.
The third type of Audit Opinion is an Adverse Opinion. In this type of Audit Opinion, the misstatements identified by the Auditors are so significant that they become pervasive to the whole Financial Statements and therefore the auditors state that the Financial Statements are materially misstated and do not conform to IFRS (International Financial Reporting Standards).
If this type of Audit Opinion is issued by external auditors, it impacts the outlook of the Company being audited negatively. As such, it will be perceived negatively by all stakeholders, particularly those such as Shareholders, Bankers, and Investors.
Disclaimer of Opinion
This fourth type of Audit Report is the most undesirable type issued by Auditors in Dubai and the rest of the UAE. It is negatively perceived by all stakeholders of the Company such as Shareholders, Bankers, Lenders, Investors, etc., and will have a significant negative impact on the company’s operations and ability to function.
A disclaimer of opinion is issued if:
- The Auditing Firm is not independent or there is a significant conflict of interest;
- There is evidence of significant Going Concern problems in the Company being audited (financial limitations to continued healthy operation);
- There are high uncertainties in the business;
- Scope limitation exists due to which the Auditors cannot form a reasonable Audit Opinion.
In the case of a Disclaimer of Opinion, the Auditors can be unable to form an opinion about the Financial Statements due to the problems identified above.
Deciding on which Accounting or Auditing Firm in the UAE you should use for the External Audit should be approached thoughtfully. This is a very important decision and requires consideration of the following factors:
- History of the auditing company in Dubai or any other Emirate of the UAE;
- Experience of the Audit Partner, Audit Team, & audit services within the UAE;
- Qualifications and competence of the Audit Partner and the Audit Team;
- References from clients to endorse the quality of the Audit work;
- The Fee charged in comparison to the Audit Quality provided.
Our auditors are certified by International Chartered Accountancy Bodies such as ACCA, ICAEW, ICAP, and ICAI. They possess complete knowledge of the Auditing and Accounting Standards issued by Professional Bodies such as IAASB (International Auditing and Assurance Standards Board) and follow the stringent standards of organizations such as the ACFE (Association of Certified Fraud Examiners).
A premier auditing company can have a dramatic impact, assuring everyone that the company is operating as it should and that its financial house is in order. A profitable, sensible business can’t afford to be dabbling in accounting with inexperienced auditors. You need an established service provider—with a flawless reputation—to garner the maximum benefits, and to assure that you stay firmly on the right side of the law.