An accounting review is a valuable process for businesses, yet many owners remain unclear on exactly what it involves and why it matters. This comprehensive guide will break down accounting reviews step-by-step using plain language so the benefits are crystal clear. By the end, you’ll be confident a review is a smart move for your UAE company.
What is an Accounting Review?
An accounting review is when a certified accountant takes a close look at your company’s financial records, bookkeeping practices and overall accounting systems. Their goal is to analyze how accurately your books capture business deals and check everything follows proper standards.
They act as a second set of experienced eyes to spot any errors, issues or places for improvement that your regular bookkeeper may miss. Accounting reviews provide assurance your numbers and processes are solid before deadlines like tax time arrive.
Why are Reviews Important?
Account reviews become extra crucial as the UAE introduces new corporate taxes starting in 2024. Getting a third party expert to scrutinize your books now allows time to address any mistakes or weaknesses found. This prepares you to comply fully with upcoming regulations.
Reviews also help maximize legitimate tax deductions by ensuring all expenditures are recorded and claimed properly. Accurate books strengthen your position if authorities ever question filings. Meanwhile, sloppy records increase odds of disputes and penalties further down the line.
When Should You Schedule One?
Ideally, the optimal window for an initial accounting review falls after your business has been keeping financial records for 6-12 months. Waiting this long means transactions cover various cycles to reveal complete operational patterns over time.
Setting a review during this bedding-in phase leaves a full year or more to implement recommended changes calmly before tax season arrives. Rushing an review with incomplete data limits its usefulness versus starting when your books provide a rounded picture.
The Review Process
Now let’s unpack the typical steps accountants follow during an on-site review:
Requesting Records– Essential paperwork like bank statements, receipts, invoices and your chart of accounts are gathered for examining. This forms the core material.
Analysing Bookkeeping– Methods used to record income/expense transactions are inspected to ensure consistency with accounting principles. Any irregularities surface here.
Testing Sample Entries– Random selections from the books are recalculated and cross-checked against supporting documents to verify accuracy throughout.
Identifying Findings– After completing their analysis, the accountant outlines clear results including errors noticed, missing details and processes requiring improvement.
Producing an Action Plan– The final deliverable lays out specifically what changes are needed and timing for implementation before the next review cycle begins.
Having a structured process provides comfort that thorough checks cover your books from every angle leaving no stone unturned.
Common Review Findings
Some things accounting experts frequently detect include:
- Expenses assigned to incorrect categories misleading financial ratios
- Depreciation schedules not tracking assets reductions properly over time
- Source documents like receipts absent where logically expected
- Pesky bank statement reconciliations left incomplete or out of date
- Invoices/contracts missing standard clauses around payment terms, liability waivers etc.
Individually minor perhaps, but experience shows unaddressed minor blips have potential to multiply into a major compliance headache down the road if ignored.
Following the Action Plan
For reviews to pay off, commitment is vital to execute the plan of attack recommended. This may call for personnel training, upgrading accounting software, streamlining processes or analyzing specialized jobs suitable for outsourcing like payroll.
Procrastination only ensures problems surface again at your next review wasting more money band-aiding the same mistakes. Tackle issues proactively and gain lasting improvement for less stress in the future.
Conclusion
Accounting reviews provide important checkpoints that save businesses like yours time and money in the long run. Protect your company’s finances now through this temporary investment rather than learning lessons the hard way during a tax audit down the road. Getting your books examined by an expert establishes solid foundations for seamless compliance going forward.
Frequently Asked Questions
Review time frames vary based on company size and complexity – simplest one-person operations may wrap within a couple weeks versus larger corporates taking months.
Pricing scales with the project scope but basic reviews tend 1500-3000AED. Quality matters far above cheaping out or you lose valuable oversight and wind up paying more correcting future mistakes.
Not currently required by law, but strongly suggested given new taxes. Reviews catch irregularities before penalties apply that far surpass any accounting fees. Compliance is worth prioritizing over potential short-term savings.
Ensuring correct record-keeping and processes for corporate tax translates well to VAT registration, calculations and meeting filing deadlines. Reviews avoid penalties and missed refunds and make transiting to new systems pain-free.
