How Auditors in UAE Monitor Financial Growth of a Company
Auditors are the entities who strictly check the working of a company, and ensure whether they comply with the rules and regulations of the state and follow all the required procedures while performing the business activities. They conduct investigation, attestation, reporting processes and communicate the result so received to the interested parties. Auditors in UAE play a vital role in maintaining the financial growth and monitoring its growth. They use different tools such as cost analysis, sales analysis, comparative study etc. to study the financial growth.
How do auditors monitor the financial growth?
The auditors of a company dig deep into the core part of the business and examine each and every aspect relating to its working. They invigilate the accounting process, management of the company and check whether there is any disparity between the planned performance and actual performance including growth of the company. They detect each and every change and analyze whether the effect of the change detected is positive or negative, if it is negative the required measures are taken to avoid the negative circumstances.
The main steps taken by the auditors to monitor the financial growth are as follows:
- Preparation and evaluation of the financial statements: Every firm should mandatorily maintain the financial statements and the records to track down the growth. After the preparation of these statements the auditors ensure whether these statements are prepared in adherence to the accounting principles, and detect any errors if any.
- Management of inventory and maintaining the record of raw materials: By examining the volume of raw materials ordered and used can help the firms to get an idea about how much volume of raw materials are efficiently used and they can reduce the wastage of the raw materials. The auditors can prepare a record on the basis of the amount of raw materials purchased and used and they can, on the basis of the report prepared, monitor the financial growth by getting the clear picture of costs incurred by the firm.
- Continuous evaluation of overhead costs: A firm must always evaluate the overhead costs incurred in the normal course of business, and it must try to reduce as much as possible which may result in financial growth. Auditors can monitor the financial growth by studying the overhead costs incurred by the firm and concentrating its effect on the financial growth of the firm.
- Studying the marketing expenses incurred by the firm: Marketing expenses mainly includes all the expenses incurred for advertisements and promotion of the goods and services of the firm. If the firm is able to market the goods in the new territories as a result of the promotions made then it will have a positive effect on the financial growth whereas, if there is no expansion in customers or territories then the firm must decrease the marketing costs. The auditors examine the marketing expenses and the effect of those expenses on the profit, i.e. whether there is any improvement or not, through which they get a clear picture of the financial growth of the firm.
- Avoiding fraudulent activities and malpractices: The firm must always follow the rules and principles of accounting as well as it must adhere with the laws of the land. Auditors ensure that the profit attained by the firm is achieved through legal business activities only and not out of any fraud or malpractices.
Auditors are involved in each and every aspect of a business, they act as a guide for the firm and detect every slight variation in the financial growth of the firm. Auditors examine each and every record relating to sales, cost, revenue, assets and liabilities etc. to get a clear picture about the financial growth. Suppose a company incurs a huge amount of overhead cost then the auditor may report that there is need to have a control over the overhead cost incurred because the financial state of the firm will be affected due to it. Through continuous monitoring the auditors can provide advance warning signals to the firm to avoid future consequences. Similarly, the auditors may study the expenses incurred by the firm in marketing activities, and it may conduct an evaluation whether the expenses incurred had brought any positive changes or not, and its effect on the sales. If the sales increase then it may be a positive sign for the firm, but if there is no remarkable change in the sales then the auditors may inform the firm to reduce the expenses, through which the firm can earn satisfactory profits.
Auditors can, by continuously monitoring the financial growth, help the firm to avoid future threats and it helps to survive in the business environment. Hence, through different procedures the auditors try to maintain a balanced financial growth by looking into each activity of the firm.
How does CDA help in monitoring the financial growth of a company?
CDA provides comprehensive financial and accounting services to its clients such as book-keeping, internal auditing, bad-debts accounting, online-accounting and many more. We always try to ensure customer satisfaction by providing cost efficient services, keeping in mind the goals of the firm. We are always ready to put our efforts together to provide competent services.
Hope you have a clear idea of how auditors in UAE monitor financial growth of a company. Still, have queries about monitoring the financial growth of a company? Feel free to contact CDA. Our experienced team has been providing these services for such an extent that they get it right every single time.