With the surge in newly established businesses in the UAE, it is rather evident that businesses are implored to be the backbones of the economy.
However, businesses need to be checked constantly to certify that they’re what they say they are.
An audit process is mandatory in any publicly-held business. In the UAE, auditing is mandated by the government, investors, shareholders, lenders, etc.
Therefore, it is essential to certify that the financial reports published by a business or an organization are as stated by the business and not tampered with in any way.
Internal audits vs. external audits
While an internal audit is more concerned with process control and efficiency in a business environment, an external audit, on the other hand, provides a fair opinion of an organization’s financial reports.
You must understand that internal audits are employees of the business and are answerable to the management. In contrast, a shareholders’ vote brings in an external audit to work independently.
Why you should consider outsourcing external audits
It is fair to say that external audits are required to keep business shareholders and investors informed and not hidden from the health of their investments.
Conversely, creditors and lenders can make decisions regarding loans given to businesses. To that end, external audits are brought in to provide a fair and unerring opinion of the company’s financial books in accordance with the generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS).
Here are reasons why external audits need to be Outsourced
Impartial Opinion on Findings
One of the critical reasons why external audits need to be Outsourced is to provide an impartial judgment of a business’s financial reports.
When it comes down to auditing by internal audits, there’s every reason to think that internal politics and the relationship between auditors and management may influence the audit’s outcome. On the other hand, an external audit is not influenced by internal politics or relationships.
Since they’re independent and not hired by an organization’s management like in the case of internal audits, it is safe to say that they will provide nothing but honest and professional opinions as they’re not scared of the repercussions that may follow after their findings have been published.
When you outsource external audits, they provide a transparent opinion of the business financial statements. If found as the business reports, it could lead to the company being more credible in the marketplace.
When a financial statement is cleared and certified by an external audit, It proves that a business is more credible than when audits hired by the business management carry out the auditing process.
Furthermore, since there’s no room for falsification of statements, it makes it a lot easier to raise funds from creditors and lenders alike or sell your business out with a lot of confidence on the buyers’ side.
Increases Shareholder’s Confidence
In most cases, shareholders are fronted by a small board of directors which limits the involvement of the shareholders.
These limitations can have financial defects hidden from the shareholders or reports altered without their notice.
In such cases, an audit conducted by an external, independent body will boost the shareholders’ confidence as it reminds them that the business continually works with their interests in mind.
Are you looking to hire an external auditor?
An auditing process requires extreme professionalism and understanding of the various accounting principles. At AM-Audit, we provide expert opinions and improvement curves to help you make value-added decisions. So what more are you looking for? Fill out our contact form, or better still, put a call through to us at your earliest convenience.