When an external auditor asks a question to better understand a certain accounting transaction, the majority of business owners become worried. You may also have difficulty making sensible company judgments as a result of erroneous financial data, but a proper audit log or audit trail would have protected you from such unforeseen circumstances.
An audit trail is a collection of documents that may be used to verify the accuracy of transactions recorded in your accounting books. The audit trail is made up of the accounting records you retain for recording your business’s transactions. You can follow a transaction back to its source using an audit trail. An audit trail, whether electronic or physical, can also assist you in understanding your company’s financial history and current situation. You can assure appropriate management of the accounting trail by choosing the top accounting services in Dubai.
What is the purpose of an audit trail?
An audit trail is a record of business events like the creation of an order, the delivery of a cargo, the filing of an insurance claim, and so on. Each record would include details such as the nature of the event, who was in charge of its creation, and the day and time it took place. Businesses employ audit trails to ensure that accounting entries are correct. Healthcare, banking, accounting, and IT are just a few of the areas that employ audit trails frequently.
You should preserve the following papers as part of your audit trail:
- Purchase orders
- Invoices from a company
- Written estimates
- Transactional correspondence (e.g., emails)
What are the Benefits of Having an Audit Trail in Your Company?
Because of the following reasons, it is critical that you have a robust audit trail:
Fraud Detection and Avoidance
An audit trail can help you detect and prevent fraud within your company. You can authenticate certain accounting transactions using a trail of papers, allowing you to prove they are valid. Ensure that each payment is accompanied by supporting papers such as purchase orders and invoices that have been approved.
Your audit trail should include a financial reconciliation as well. An audit trail not only aids in the detection of fraud, but it also aids in the prevention of it. Employees will be less likely to commit fraud if they are aware that you are monitoring and recording their activities with an audit trail.
Lessens the Stress of Auditing
An audit trail is extremely helpful to auditors during financial audits, in addition to letting you trace accounting transactions. The audit trail can be used by auditors to locate and verify the operations of the company. The audit process will go well for everyone involved if your organisation has a solid audit trail.
Annual audits are typically regarded as onerous by business owners and managers. It is, however, less stressful for you if you have a well-prepared audit trail. Consider the following scenario: the auditors have discovered an unusual transaction in the account books and have asked you to verify its accuracy. Without an audit trail, it would be more difficult to verify the transaction. However, if there is an audit trail, auditors can check supporting evidence such as invoices to confirm the transaction. Accounting firms in Dubai can aid you in keeping track of your audit trail efficiently.
Records are more accurate.
An audit trail is a powerful tool for dealing with the problems that come with erroneous financial records. Business owners, investors, and lenders all benefit from accurate financial data. An audit trail gives you a comprehensive picture of your company’s finances and confirms that your accounting records are correct. With the guidance of the top accounting firms in Dubai, create a thorough audit trail.
Aids in the Obtainment of Loans With Ease
Banks in the UAE will request your business plans and financial documents if you are searching for a loan for your company. To authenticate the information in the financial accounts, banks would want verification of revenue and expenses. An audit trail, consisting of rigorous record-keeping, will assist you in providing enough financial information to lenders.
Some banks will even demand an audited financial statement from you. Maintaining accurate records of all transactions speeds up the process and lowers audit costs in Dubai. Maintaining a proper audit trail will benefit from the assistance of the best accounting firms in Dubai.
HR & Payroll Issues Will Be Easier
The audit trail relies heavily on payroll and human resource records. Companies must keep track of who they hire, fire, pay, and whether or not they are eligible to work in the UAE. The labour department may impose penalties if certain mandatory standards are not followed.
Employee disagreements are typical in an international market like Dubai. Managing employee conflicts will take up a lot of your time and money. Avoiding such disagreements will be easier with an audit record. Keeping track of all time, cards, and other employee records is a good method to reduce the dangers associated with such disagreements.
Our Accountants can assist you in the following ways.
To check whether a transaction is accurate or not, businesses must properly document each accounting transaction using either traditional or electronic means. The audit trail is made up of records including purchase orders, business invoices, written estimates, and transaction correspondence. Accounting firms in Dubai, such as ours, can help you build a solid audit trail for your business. Our highly qualified Chartered Accountants in Dubai, UAE can diagnose and provide insights into the problems with your accounting department. We can manage your books of accounts and provide professional financial reports to assist you in obtaining loans and investments. You can also ensure that your company’s financial health is in good hands by hiring our best accounting services in Dubai.
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