5 Common Mistakes you should avoid during Auditing

Experience shows that no audit firm in Dubai is accomplished without detection of errors or omissions in the accounts maintenance and tax bookkeeping and the compiling of a financial statement. Surely some errors occur because of carelessness, but some of the mistakes are done due to misinterpretation of the law. On the basis of experience, the 10 most ordinary errors that can occur during an audit are as under.

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  1. Monitoring and verification of the data in Statement

Generally, companies use automatically generated results with the help of software to produce financial statements. Such statements have may various errors due to insignificant accounting data.

  1. Distortion of Receivables and Payables for the Creation of Accounting Reports

Underreporting related to receivables and payables, according to rule, it is due to the netting of debt for various counterparts. These cases include netting reflection of the company’s debts to workers for salaries or cost accounts. In order to correct reflection of receivables and payables, you should monitor the timely crediting of received/paid advances. You should also monitor the absence of netted receivables and payables for various stack holders in financial statements.

  1. The Company does not collect the necessary reserves – providing doubtful accounts, provision for the ruination of actual assets

Some corporations refuse to increase assets completely in crisis conditions or attempt to reduce their size to a minimum condition because the computation of the reserve directly decreases the profit margin gained for the current period.

Reviewing that monetary explanation indicators should provide a reasonable introduction of the money related condition of the organization. On account of suspicious records receivable or inventories that have turned old, and the likelihood of their future use is uncertain, organizations should accumulate the particular in reports.

  1. Companies accumulate a conceded tax resource in the report of tax losses without surveying the likelihood of utilizing the advantage

As per rules of the tax regulation, companies have the basic right to proceed while carrying tax losses in the future for next decade. Commonly audit firms in Dubai, those that produce tax losses year after year, mentioned the loss in tax asset on the balance sheet, although not evaluating the possibility of the company to use the accumulated tax loss.

The companies mentioned tax loss based on an assessment of existing financial consequences and predictions of tax results.

  1. Inaccurate date of posting physical assets while importing goods

In order to import products from a foreign supplier, accounting presents their entrance in accounting as of the Customs date stamp “Release is allowed.” All the resources of the firms must be capitalized as per the date of transfer of ownership. The time schedule for the transfer of ownership will determine by agreement of the parties. Commonly, the time of transfer of ownership is linked with the time of transfer of risks, usually at the time of transferring of the products from the seller to the carrier. This means that this is the date when the products must be shown in accounting.