Audit & Assurance
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Get benefited from our in-depth knowledge of Management, statutory, internal & external auditing in UAE frees zones & Mainland. HT Corps Chartered Accountants Group (HTC CA) possesses diversified expertise of financial audit in main land of UAE or any of the free zones in Dubai & across the UAE.
Importance of Auditing
Audit is an important term used in accounting that describes the examination and verification of a company’s financial records. It is to ensure that financial information is represented fairly and accurately.
Also, audits are performed to ensure that financial statements are prepared in accordance with the relevant accounting standards. The three primary financial statements are:
- Income statement
- Balance sheet
- Cash flow statement
Financial statements are prepared internally by management utilizing relevant accounting standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). They are developed to provide useful information to the following users:
- Shareholders
- Creditors
- Government entities
- Customers
- Suppliers
- Partners
Key Differences Between Accounting and Auditing
| Particulars | Accounting | Auditing |
| Definition | Accounting is the process of classifying, recording, interpreting and summarising the financial statements and transactions to determine the actual financial position of an organisation. | Auditing is the process of examining the financial statements and records of an organisation to find discrepancies during the process of recording of transactions and to verify the accuracy of the records. |
| Purpose | Accounting is done with the purpose of reflecting the actual position, performance and profitability of the business or organisation. | Auditing is done to verify the accuracy of records and statements presented by accounting. |
| Objective | To determine the profit and loss or the financial position of an organisation for a period. | To determine the correctness and accuracy of all the recorded transactions. |
| Period | Accounting is done daily, as transactions happen on a daily basis. | Auditing is a periodical assessment and is done on a monthly, quarterly or yearly basis. |
| Responsible person | Accounting is done by accountants. | Auditing is done by auditors. |
| Initiation | Accounting starts at the end of bookkeeping. | Auditing starts at the end of accounting. |
| Concentration | Concentrates on the current financial activities and transactions. | Concentrates on the past financial statements. |
| Scope | All records, transactions and statements having financial implications. | Final financial records and statements. |
| Details used | Captures all details related to financial records and transactions. | Uses financial records and statements on a sample basis. |
| Governing standards | Governed by Accounting Standards. | Governed by Standards on Auditing. |
| Carried out by | Carried out by an internal employee. | Carried out by an external person or independent agency. |
| Appointment and removal | Accountants are appointed and removed by the management. | Auditors are appointed and removed by the shareholders. |
| Remuneration | Accountants receive a salary. | Auditors receive auditing fees. |
| Deliverables | Financial statements, i.e., income statement or profit and loss account, balance sheet, cash flow statement, etc. | Audit report |
| Report submitted to | Management | Shareholders |
| Suggestions | Accountants can make suggestions for improving the accounting and related activities. | Auditors usually do not make suggestions. |
| Liability | Liability ends with the preparation of the accounts. | Liability ends after preparation and submission of the audit report. |
| Attend meetings | Accountants do not attend shareholder’s meetings. | Auditors can attend shareholder’s meetings. |
| Prosecution for misconduct | Accountants are not usually prosecuted for professional misconduct. | Auditors can be prosecuted for professional misconduct. |
Different types of audit in UAEThe audit is an art of systematic and independent review and investigation on a certain subject matter, including financial statements, management accounts, management reports, accounting records, operational reports, revenues reports, expenses reports, etc.
Internal audits
The external audit refers to the audit firms that offer certain auditing services, including Assurance Service, Consultant Service, Tax Consultant Service, Legal Service, Financial Advisory, and Risk Management Advisory.
External audits
The external audit refers to the audit firms that offer certain auditing services, including Assurance Service, Consultant Service, Tax Consultant Service, Legal Service, Financial Advisory, and Risk Management Advisory.
Forensic Audit
The forensic audit is normally performed by a forensic accountant who has the skill in both accounting and investigation.
Statutory Audit
Statutory audit is referring to an audit of financial statements for the specific type of entities required by law or local authority. For example, all banking sectors required their financial statements to be audited by qualified audit firms authorized by their central bank.
Financial Audit
Financial audit refers to the audit of the entity’s financial statements by an independent auditor where audit opinion will be provided on those financial statements after auditing works are done.
Tax Audit
A tax audit is a type of audit that performing by the government’s tax department or tax authority.
Information System Audit or Information Technology Audit (IT Audit)
An information system audit is sometimes called an IT audit. This type of audit assesses and checks the reliability of the security system, information security structure, and integrity of the system so that the output that the system produces is reliable.
Compliance Audit
A compliance audit is a type of audit that checks against internal policies and procedures of the entity as well as laws and regulations where the entity operates. Law and regulation here is referring to the government’s law where the business is operating.
Value For Money Audit
Value for money audit refers to audit activities that perform in assessing and evaluating three main difference factors: Economy, Efficiency, and Effectiveness.
Review Financial Statements
Reviewing financial statements is a type of negative engagement where auditors are engaged to review the financial statements of the entity.
Agreed Upon Procedures (AUP)
The agreed-upon procedure is the type of negative engagement where auditors perform their review on the procedures that are agreed with the client. This type of engagement is called limited assurance. Even though the client’s procedures are set, auditors will also need to make sure that the firm has enough resources to perform the job and the fee is not low-balling.
Integrated Audit
Integrate audit is happen when there are two different areas of audit requirements. For example, there is a financial audit and a social audit, or there are some areas that need to be confirmed with the financial audit.
Special Audit
A special audit is a type of audit assignment that is normally done by the internal auditor.
Operational audit
Operational audit is the type of audit service that mainly focuses on the key processes, procedures, systems, and internal control. The main objective is to improve productivity and efficiency, and effectiveness of the operation.