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Statutory Audit

Statutory
Audit

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Statutory Audit

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    About
    Statutory Audit

    Statutory Audit is a mandatory legal requirement to ascertain how accurate are the records, accounting documents and financial statements of an organization, company, an individual or even a government. It is undertaken to ensure that the organization is being fair about the disclosure of its financial position.

    Purpose of
    Statutory Auditing

    The objective and purpose of this exercise are to evaluate if the allocated resources were handled amicably as per laid down rules and that all recorded entries are filled inaccurately. All this activity does not imply that any misconduct happened, but it sends a healthy message across organizations that any misconduct or financial crime will be investigated and is strictly discouraged.
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    How statutory
    Audits work

    The term statutory highlights the fact that it is a legal necessity enacted by the associated government of the organization’s legislative branch. In this audit, records which are maintained by the organization, government, company, or an agency are examined and scrutinized in detail. including different financial records or similar relevant documents. Revenue or benefit reports, expenditure sheets or record of returns on investment and similar other things are included in this audit process. This helps in ascertaining a cumulative ratio.

    Examples of
    Statutory Audits

    As per UAE State law, all business entities are required to undergo and submit annual statutory audits. This includes checking all financial accounts and transactional record and make it available to public in case of municipalities of government. This keeps tabs on government agencies since they are custodian of public money. Government agencies specially participate in these audits regularly to ensure fair and honest disbursement of funds provided by larger federal agencies. In the private sector too, it is mandated that companies adhere to this requirement governed by law of the state in which they are conducting that business. e.g. a company ABC in the US that frequently conducts business in the European region through its various branches may be required to provide annual audits of those business units to the government of the country in which they are operating.

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    What is the Difference between a
    Regulatory Audit, Statutory Audit and Performance Audit?

    There are different types of Audits for different desired outcomes. Regulatory Audit, Statutory Audit and Performance Audit are 3 major categories and following are some of the distinguishing features of each.
    Regulatory Audit Icon

    A Regulatory Audit aims to find out regulatory compliances of a sector with the mandated law.

    Performance audit Icon

    A Performance audit examines the effectiveness and efficiencies of various methods employed in the business to identify the most efficient one.

    Statutory audit Icon

    A Statutory audit reviews the financial statements of the business as mandated by the law

    These three types of audits mentioned above, aid the management by examining the processes and procedures. But the major difference amongst the three is that it is only the Statutory Audit which is the most comprehensive and complete audit. A regulatory audit informs about the product, and the performance audit informs about a process, but the statutory Audit helps us get a whole picture of the entire organization.

    What are the
    Statutory Audit Requirements?

    Holding the following documents are essential requirements before carrying a statutory audit:
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    Local and export sales’ information

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    Inventory, administration and selling expense details

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    Foreign exchange earnings & expenditures’ details

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    Statutory dues & other levies

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    Fixed assets, details of bank statements transactions, cash receipts & payment information

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    Details of secured and unsecured loans, advances, Trade receivables and payables

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    Local & import purchases

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    Looking for statutory Auditors?

    If you are in search of one of the best Statutory Audit services in the entire UAE region, look no further and visit our office at ebs where you will find a team of dedicated consultants equipped with relevant experience who take pride in creating value for their clients. They accomplish this by providing one on one customized services and audit solutions to address your unique accounting and audit needs in line with the latest updates on IFRS related to compliance.

    EBS FAQs

    FAQ’s

    Commercial Companies Law mandates that a Statutory Audit is compulsory for all registered business entities. Certain free zones have unique auditing requirements and do not come under the ambit of Statutory Audit.

    Certain other government authorities such as various Ministerial Departments, Insurance Authorities, the Municipality, etc. also require business entities to submit their audited financial statements as and when demanded by such authorities.
    For each branch of a foreign company, registered in the UAE, it is mandatory to submit the audited financial statements.

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