What is a Statutory Audit and What are its Benefits?

No matter the size of the company, conducting a financial audit of the company is very important. The importance of a financial audit of the company cannot be emphasised enough. There are various types of Audits of a company such as Statutory Audit, Performance audit, Regulatory Audit etc. it is up to the management of the company to choose the best type of Audit process which will be suitable for a company.

In this blog, we will know more about Statutory Audit and how it can help your business in the United Arab Emirates.

What is Statutory Audit?

A Statutory Audit can be defined as a review and examination of the financial statements of the business which are legally required from the business according to the local laws and regulations of the jurisdiction. It is usually performed by the board of directors or the management of the company. Statutory Audit means providing services related to auditing which are deemed important.

The companies which are registered in the United Arab Emirates are required to complete and present the audit of the financial books of the company in accordance with the International Financial Reporting Standards (IFRS).

There are various advantages of a Statutory Audit for a business. Some of the advantages of Statutory Audit are:

1.Increases Authenticity of the Financial Statements of the Company

When a statutory audit of the financial statements of the company is conducted, the auditor examines all the financial book to find if the information provided to the management as well as the investors is correct. The audit of the company will help in ensuring that the information provided by the business is correct and the investors, as well as the management of the company, can decide upon the future decisions after studying the books of the company.

2.Ensure the Attention of the Management

The statutory audit will make sure that the management has provided an adequate amount of attention in the fulfilment of the responsibilities of the business. if the management would not have provided attention to the business activities, the profitability of the company will go down, and so will the confidence of the investors. The statutory audit will help the management maintain this level of trust among the investors.

3.Addresses all Compliance Requirements for the Company

In the present situation of the world, it is very important for companies to comply with the rules and regulations of the jurisdiction. The government are putting special emphasis on maintaining compliance so that the interests of both the companies as well as the government is taken into consideration.

4.Helps in the Understanding of the Company Processes

The audit of a company allows the management to understand the various business processes in detail. The management will also be able to understand the various processes of the company and accordingly make a plan for the future of the company.

5.Allows easy accessibility for Loans and other forms of Credit

One of the major Importance of an audit report is that an audit report helps the management to get loans from banks and also allow the businesses to generate different other types of credit. An audit report also helps in the generation of confidence and trust among its investors which will help the company in the stock market.

6.Reduces Risk for the Business

As the auditor will understand the various processes of the business, he will be able to better provide solutions to its various problems. This will reduce the risk for the business and will also pave a path for the future. The removal of risk from the business will be very beneficial for the business, and sticking to the future path will help in the achievement of the set goals.

With these benefits, the statutory audit of a business will help a business to become more profitable and will ensure that the business complies to the rules and regulations as set by the jurisdiction.

If you want to know more about Statutory Audit and how it can benefit your business, feel free to Contact the Expert professionals at JAXA Chartered Accountants. JAXA also provides various other financial services such as Accounting Services, VAT and Tax related services etc. To know more about these services, Contact Us. We will be glad to assist you.