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You might have a great business idea, a great team of engineers, a huge lot of investment, enough experience and knowledge of business but your business or company would still not suffice much longer if you don’t understand money and don’t analyze your company financially and understand where your money is going and how you are getting it back.
Every year in UAE many companies just get shut because they do not have proper proofs to showcase their earnings or to claim their financial success in papers. This is due to the company’s negligence in accounting and audits. This very article is about those who help you understand your business financially and do the work of accounting and conducting audits of your company: Auditors and Accountants.
Who are auditors and accountants?
Following the chronological order it is the accountant whose work comes first and involves the recording of all the financial transactions of the company right from the expenditure on stationery to the expenditure on payrolls, revenue generated, tax filed and the smallest penny earned or spent. This is called bookkeeping. The accountant in Dubai also has to take care of all receipts and bills and bank accounts and also maintain proper cash flow.
The accountant has to create the financial statements of the company combining all the data recorded, the bank transactions, and also keeps together all bills and receipts which will later help in the process of auditing. Now comes the role of an Auditor in Dubai who is a person authorized to review and analyze the financial statements of a company and ensure that the company is abiding by the tax laws. They protect companies against any frauds and point out mistakes and flaws in the accounting reports and process and they are the best people who understand the business by looking into their financial statements and thus often provide consultancy services, helping the company to boost their efficiency.
Role of an Accountant
The accountant in Dubai can vary from company to company, where somewhere accountant is a simple bookkeeper and somewhere the accountant is a learned professional who even analyzes the data and provides inputs for betterment. But in general, the role of an accountant in Dubai mainly involves the following: –
- Recording of all financial transactions or what is called bookkeeping
- Analyzing the recorded data and forming trends and statements.
- Finally reporting this data to the agencies, regulators, and tax collection authorities or the auditors for further processing. This report is termed as financial statements which are a concise summary of the company’s financial records of the financial year.
Role of an Auditor
It is the auditor in Dubai who works on the reports and statements recorded and given by the accountant. Thus, they work very closely. The work of an auditor also varies from company to company, sometimes they are appointed by the company itself which is called internal audit and sometimes either the investors or the government bodies appoint auditors externally, which is called External Audit. The following are the general roles performed by the auditor in Dubai.
- Firstly, it involves the review of the books to check whether they are abiding by the rules of bookkeeping or not and then checking through every transaction and also seeing that every transaction is backed by proof which maybe bill, receipts, or bank statements.
- Making proper adjustments in the books and statements so that they are according to the laws and reporting any discrepancy in the accounting process which needs to be corrected as early as possible.
- They finally analyze the edited data and creates his or her report called the Audit Report which depicts the financial condition of the company.
- The auditor has to calculate the correct taxes to be paid considering their financial turnover and other specifications and laws by the tax collecting bodies and also seeing to the fact that it is calculated very accurately.
- The auditor keeps track of every penny right from where it came and to where it went thus maintaining the cash flow.
Why are accountants and auditors needed?
While going through so much about accountants and auditors, it is quite clear that they are an integral part, working for the efficient functioning of any business. Now here are listed some various reasons why you should be hiring them, and these reasons clearly show that they are not only important for an owner of a business, but they are quite helpful to investors and the general public in common.
- Investors invest money not just because they have with them but because they want to earn profits and get more than that they have invested. That’s the reason why they often don’t trust the reports made internally by the company, he or she has invested in and so they arrange for a team of external auditors and accountants, whom they trust and who give them the accurate reports about company’s success, whether they made a profit or not and by what amount.
- There are many public companies where every stakeholder wants to know how exactly is the company is performing financially and whether they are getting correct returns or not. For this companies get their audit reports published so that they can gain the trust of the stakeholders and investors.
- There have been past instances in Dubai where many companies just got saved from paying high penalties for internal discrepancies in their books because they were reported to the company at the right time by their auditors who saved them from the quite possible loss of prestige in the market.
- The investigation done in the process of company due diligence is generally performed by the auditors who review the target company’s financial statements and many other specifications thus helping the company to take the correct decision.