Are you running a business in the UAE or have a business setup in Dubai? Avoiding internal audits is one of the quirks of most business owners and stakeholders. But the truth is that delaying internal audits is one of the many factors that makes your business a sinking ship. In this blog, we’ll walk you through all the essential steps involved in an internal auditing that you can smartly customize to suit the unique context and requirements of the UAE business landscape.
It does not matter whether you have a Dubai Mainland company setup, or one of the the DMCC companies in Dubai, or if you run a hotel business, or are looking for analytics and insights as a business consultant—this checklist checks all the boxes and you can trust on it as your reliable companion for regulatory compliance, ensuring operational efficiency, and a sustained growth curve.
But what is the significance of an internal audit for a business, and how does it work? You can consider an internal just like your regular dentist appointment. Just like a dental appointment that helps find issues and curb them before they turn into painful aches, an internal audit is a complete check-up for your company.
Firms operating in Dubai can make use of a focussed Internal, helping them to streamline their process, assess their existing financial practices, and identify any risks that can sooner or later turn into costly problems. Not to miss, availing services of a reliable internal audit company in UAE can help you stay compliant with the regulatory standards of the land.
To start with an internal audit, you need a well-structured internal audit checklist in 2024. This document shall serve as your guide book for the team working on audits, and help chart a clear route of all prerequisites and actions that the team shall adhere to for finishing the audit process. This starts from analysing the existing internal controls, checking your business financial statements and records, and how to conclude the assessment you have made.
Step 1: Explore and Assess all Existing Regulations
This step is often undermined. As a business functioning in the UAE, you must know and understand the laws of the land. In the practical scenario, the regulatory environment is changing and has multiple intricacies that directly or indirectly impact almost all businesses operating on its land. It does not matter which industry or stage you are at, the legal regulations are well defined, yet dynamic in nature.
Both Dubai Mainland company setups as well as the DMCC (Dubai Multi Commodities Centre)–function as per the governed framework of the federal and the local laws, licensing requirements and legal regulations. Thus, as a business owner, you must ensure that your business comply with the latest obligation pertaining to corporate taxation (CT) in Dubai. To avoid any challenges and safeguard your business from compliance issues, be diligence-ready at all times.
Step 2: Define a Scope and Standardise Objectives
Just like in other areas, before venturing into the internal audit process, define a create scope and list all objectives that you plan to achieve from this internal audit. Remember to tie back these objectives with the overall organisational goals. Consider your operational processes, compliance regulations, internal checks and controls and financial operations within the firm when defining the scope of internal audit.
While you are at it, it’s wise to work around SMART objectives. SMART signifies–Specific, Measurable, Attainable, Relevant and Timely. With this structure in place, your auditors are in a better position to derive meaningful financial insights and suggest clear improvements in areas that need change.
Step 3: Identify Risks and Establish Control Checkpoints
This is one the most important steps in the process of internal audit. Perform a detailed inspection and assess and list all current and potential risks that could impact the financial health of the business. Next, chalk out mitigation plans to address those financial risks and assess the efficacy of the existing checks in place. Assessing the current controls helps you better deal with challenges, what is popularly termed as Crisis Management, during a situation of financial crisis.
If you are into a hotel business in Dubai, your risk may defer from another firm that is into constructions or cosmetics or a healthcare product brand.
Step 4: Create and Maintain Operational Documents
Internal audit is an extensive process that can take anywhere from a few days to several months, depending on your firm, operational procedures, availability of resources and many other factors. Due to this, it is quite possible to skip the details if you don’t document everything.
Throughout the internal audit, create clear documentation and add recommendations, results from tests, workpapers, sample checks and audit planning paperwork to ensure better clarity and efficiency. Not only this, maintaining clean documents during your audit helps ensure that your future internal audits are quick and involve less effort.
Step 5: Audit Your Finances
Your finances are the backbone of your firm’s long-term success. Check the accuracy of your financial reports, compliance with AS (Accounting Standards), etc. To ease the process, especially for businesses with massive data and records, assign clear responsibilities. This will enable you to thoroughly check your financial statements and identify any errors and financial frauds.
At this time, cross check all records and data integrity with the entries.
Conduct an assessment of the control action plan and review bank reconciliation, expense controls and authorisation regulations. Lastly, check UAE’s latest tax regulations and policies and compare if your company’s financial compliance is the same.
Step 6: Manage Operational Requisites
Clearly evident from the title, auditing your operational processes and their efficiency is all that needs to be done at this stage. Assess the efficacy of your set procedures, check key metrics, and current industry standards and how well your firm performs compared to them.
This is a good time to see how you can improve your operational process, remove manual and repetitive tasks and optimise cost. Lastly, evaluate resource utilisation and optimise wherever required.
Step 7: Ensure Legal Compliance
There are multiple business and industry-specific policies and regulatory requirements that you must adhere to in UAE as a business. Fill the right tax amounts, maintain permits and licences, and double check if your business followed all local and federal laws.
You may want to take the help of a legal professional with a strong understanding of the nuances applicable for your business and who can assist you to protect and enhance your firm’s growth and reputation.
Consolidated Reports and Take a Action
The goal of performing an internal audit is to facilitate process improvements and bring financial efficiency and accuracy to your system. Once the internal audit is complete, communicate the results so you can drive a positive change. Create a comprehensive and clear Audit report based on the findings. In fact, firms should create multiple audit reports–each created to cater to different stakeholders of the business.
In a nutshell, following the above checklist for an internal audit of a business in UAE helps ensure things flow in a systematic manner and yield the best results. Using this checklist, companies can identify problem-areas and create risk mitigation plans before issues turn into costly problems.
If you want to outsource this to another firm, AB Capital is a great choice. We can handle the financial audit of any type and size of business operation in the UAE, so you can relax and focus on other areas that need your attention.
Book a free consultation with our experts and learn how we can do a successful internal audit for your business.
