Posted on Nov 25, 2017
External audit firms are responsible for providing reasonable assurance that the financial statements are free from material misstatements and prepared according to an accounting framework. External auditors are not there to settle the issues, albeit they will issue suggestions to management.
Financial statements are used for a variety of purposes and decisions. For example, financial statements are utilized by proprietors to assess management’s stewardship, by financial specialists for settling on choices about whether to purchase or offer securities, by credit rating services for making decisions about credit worthiness of entities, and by bankers for making decisions about whether to lend money. Effective use of financial statements requires that the reader understand the roles of those responsible for preparing and auditing financial statements. In an audit, the financial statements are evaluated by the auditor, who is objective and knowledgeable about auditing, accounting, and financial reporting matters. During the audit, the auditor collects evidence to obtain reasonable assurance that the amounts and disclosures in the financial statements are free of material misstatement.
Auditors in Dubai, UAE has got a lot of chances to serve their customers. The requirement for an outside examiner for a business element in Dubai is very essential, despite the fact that the yearly review isn't necessary in Dubai territory. Many of the companies in Dubai are opting for an external auditor in order to make sure that the books of accounts are properly maintained. In the case of free zones all the companies have to do annual audit by a certified auditor for renewing their trade license. Once an auditor is appointed for a company to review on regular basis, they verify the books of accounts of the company by visiting them on a regular basis and at the end of the year they prepare a detailed report to the management about the financial performance of the business.
The objective of the financial statement audit is to add credibility to management's financial statements. There are so many factors that affect the goodwill of the businesses in the market if any company needs Access to capital markets, mergers, acquisitions, and for investments as well depends not just on the information that management gives in financial statements, yet in addition on the level of affirmation that the financial explanations are free of mistakes, errors and extortion, so audit plays a vital role.
During the time spent giving reasonable assurance that financial statements are decently introduced, an auditor surveys whether:
· The assets and liabilities reported in the financial statements existed at the balance sheet date and all the transactions are correctly recorded covered by the statements.
· Transactions and amounts ought to have been recorded are accounted for in the financial statements.
· All the assets and liability should be owned by the entity.
· The financial statement amounts (assets, liabilities, revenues, and expenses) are appropriately valued in similarity with accounting standards.
· The financial statement amounts are properly classified, described, and disclosed in conformity with accounting standards.
Expected set of responsibilities for Auditors
· Guarantee consistence with set up internal control methods by inspecting records, reports, working practices, and documentation.
· Confirm assets and liabilities by contrasting things with documentation.
· Convey audit findings by setting up a final audit report and examining the findings with the organization specialists.
· Comply with federal, state, and local security legal requirements by studying existing and new security legislation; enforcing adherence to requirements; advising management on needed actions.
· Review data about material assets, net worth, liabilities, capital stock, surplus, income and expenditures.
The responsibility of an external auditor:
· The obligation of an external auditor is to express his opinion on financial statements of the company after analyzing and inspecting the books and records of the company and on the basis of their audit.
· Assess the books of record and bookkeeping frameworks for proficiency, viability and utilization of accepted accounting procedures to record transactions.