External auditors have a critical role to play in validating the finances of a company. The potential investors and lenders demand externally audited statements before lending funds and credit for the business. If it is found that an auditor has failed to detect the material misstatement, it would make a poor reflection on the profession and the firm. To define the role of external audit firms, various accounting bodies have released the auditing standards. As per those standards and expectations, we have mentioned the roles and responsibilities of an external audit firm.
What is the role of an external audit firm?
Provide an outlook for a financial statement – The preliminary financial statements are created by the financial managers. The job of an external audit firm is to reassure that those statements are free from any kind of misstatements and are prepared as per the accounting framework. They test a sufficient amount of data to provide reasonable assurance.
Understand the entity and environment – Typically, accounting is observed as number-crunching work, but as per the auditor’s financial statement do not prevail in a vacuum. It needs a thorough understanding of the internal controls, work environment, and operations. To obtain this, auditors perform a risk assessment and examine various accounting information for uncompromised data.
Extract sufficient evidence to build opinion – The opinion of the external auditors is mostly based on the evidence, which they examine during the audit. They rate the riskiness of your company to confirm that they have collected the right amount of evidence. To keep up the quality of the evidence some of them are obtained from some trustworthy third party sourced like the banks.
Should be independent of the clients – One of the crucial responsibilities of the audit firms in Dubai is to maintain an independent attitude. If they fail to do it, they might face audit problems, which would lower the assurance and credibility of the external audit. The external auditor should not participate in any of the company management teams.
The external audit firms and accounting firms in Dubai should not have any significant investments in your company before they start an audit. The firm that meets their due roles and responsibilities are the reliable ones.