An audit is a periodic examination of the books of account and records of an entity carried out by an independent third party (the auditor), to ensure that they have been properly maintained, are accurate and comply with established concepts, principles, accounting standards, legal requirements and give a true and fair view of the financial state of the entity.
→ External Audit
External audit covers all external audit activities, to ensure that the entity complies with the appropriate finance requirements, accounting standards, and other legislation governing the financial records of the entity. In United Arab Emirates, it is mandatory to submit external audit reports yearly to major free zones such as Dubai Multi Commodities Centre (DMCC), Dubai Airport Free Zone (DAFZA) etc.
→ Internal Audit
An internal audit is the examination, monitoring and analysis of activities related to a company’s operations, such as revenue, purchase, payroll functions etc. Internal audit regulations, such as the Sarbanes-Oxley Act of 2002, have increased corporate requirements for performing internal audits. Audits are important components of a company’s risk management as they will help companies to assesses the effectiveness of a company’s internal control system and helps uncover evidence of weakness in system, waste, fraud etc.