Accurate preparation of financial statements is an important requirement for companies in Dubai that are externally audited. However, most entrepreneurs need to understand the major parts of financial statements and over-rely on their accountants to prepare them. Understanding financial reporting statements will enable you to adequately prepare for external audits and assist auditors during the audit process. Keeping this in mind, this article will help you understand the reports to financial reporting statements with an audit firm in Dubai.
Companies add reports to financial statements to make key disclosures that inform the assumptions used in preparing the financial statements. Therefore, preparing financial reporting statements is the best way to prepare for your annual financial audit. Also, the audit will be successful if you have a leading audit firm in Dubai. VVAS provides the best audit services in Dubai to companies of all sizes. With years of experience in the UAE market, we will help add value to your business. We can play a key role in the success of your business by providing services in Accounting, VAT Compliance, Economic Substance Regulation (ESR), Anti-Money Laundering (AML), Ultimate Ownership (UBO), and more.
What are the reports to the financial statements?
When performing an audit, an audit firm in Dubai will thoroughly investigate the information provided in the financial statements, including the reports to the financial statements. Reports to financial statements are supplementary reports included in a company’s published financial statements. The reports explain the assumptions used to prepare the data and the company’s accounting policies to prepare its financial statements. This note helps stakeholders, investors, and analysts interpret the numbers in the financial statements.
Auditors use the reports on the financial statements to determine whether the accounting policies used by the company are appropriate and applied properly. These annotations can be used to understand fundamental issues related to the company’s financial health, in addition to the figures of the financial statements and auditors in Dubai. Also, use the reports on the financial statements as the basis for their audit opinion.
Create reports on Financial Statements.
Typically, the reports to financial statements consist of the following common elements:
This is the first part of the report on the financial statements and explains the basis for preparing and presenting the financial statements.
In this section, we obtain information about the accounting policies used by management to prepare financial statements. Providing information about accounting policies helps auditors better understand financial statements. This section highlights key aspects such as the depreciation method, how a company values inventories, accounting for intangible assets, and more. You are required to disclose all accounting policies used in the financial statements.
Depreciation of assets
Asset depreciation is defined as the value of a fixed asset over time due to normal wear and tear. The reports to the financial statements contain an asset depreciation section that tells us which method the company uses to depreciate the asset. Depending on the depreciation method management uses, we may see significant fluctuations between net income on the income statement and the value on the balance sheet. By reading information about the depreciation method, an auditor or other user can understand the difference in net income reported in the financial statements.
The fourth part of the reports to the financial statements is usually the valuation of the reports to the inventories. It provides information on how management values the company’s inventory. This information makes comparing inventory quantities over time or with other competitors easier. Dubai auditors can derive two main inventory issues from this part: determining the inventory quantity and the method used to determine the inventory cost.
The reports to the financial statements also inform us of details of any subsequent events. Subsequent events occur after the balance sheet date and before the financial statements are issued. How a company handles such events depends on whether they change the current situation as of the balance sheet date.
This section provides information about the company’s intangible assets, such as trademarks and patents. It tells us about all your company’s intangible assets and how you determine their value on the balance sheet.
This section explains the benefits companies offer employees, such as health insurance, health savings accounts, retirement plans, and more. Typical disclosures in this section include health and social care programs such as medical services, holidays, fringe benefits, etc.
The contingent liabilities section discloses liabilities that may arise mainly due to uncertain future events. For example, a pending tax dispute or lawsuit against a corporation is a classic example of potential liability.