General Documents Required to Conduct an External Audit


General Documents Required to Conduct an External Audit

The objective of a statutory audit is to ascertain whether an entity presents a just and precise depiction of its financial status by scrutinizing data such as bank balances bookkeeping records and financial transactions.

The external auditing process entails a comprehensive examination and assessment of a company's financial records by an autonomous accountant or external auditor. This procedure is imperative to ascertain the fairness and accuracy of a company's financial statements, taking into account its financial position and earnings.

Documents Required for External Audit

  1.  Trial Balance and Ledgers
  • The trial balance is the starting point which lists down all the assets, liabilities, income, and expenses of the entity during the year.
  • The auditor can understand the financial statements from the trial balance provided and ensure the final values mentioned on the financial statements match the trial balance.
  • The ledgers will help the auditor to understand the transactions that the entity has undertaken during the year. Apart from that he/she can select the samples required for further verification from here.  
  1. Legal Documents : 
  • All legal documents will have to be provided to the auditor. These would generally include the following: -
  • Trade License Copy
  • Memorandum of Association
  • Articles of Association
  • Shareholders and their Shareholding
  • Share Certificates
  • TRN Certificate
  1. Fixed Assets
  • A fixed assets register needs to be requested from the client.
  • The fixed assets register will help the auditor recalculate depreciation to ensure it is as per the Company’s policy.
  • Samples of invoices can be requested to verify the additions to plants and machinery during the year. 
  1. Receivables and Payables 
  • The auditor would request the aging report for receivables and payables from the entity.
  • Samples of receivables and payables will be asked to confirm their balances at year-end directly to the auditor – External confirmations
  • Subsequent collections and payments after year-end will be verified from the bank statements after the year-end.
  1.  Bank balances and Cash
  • Bank statements and Bank confirmations can be requested to ensure the bank balances have been recorded accurately.
  • Cash balance confirmation as of year-end needs to be taken from the management.
  1.  Loans
  • All loan documents need to be provided to the auditor.
  • This will help to ensure the loan has been accurately bifurcated into current and non-current portions and recorded.
  1. Payroll 
  • Request the payroll sheet to ensure the salaries, overtime, gratuity, etc. have been accurately recorded as payroll is the largest expense for most companies in the UAE.
  • Apart from this, the payroll sheet will also show the number of employees and these can be verified with those working in the entity.
  1. Sales, Purchases, and Expenses
  • Samples can be selected from the ledgers provided and supporting documents can be requested to verify the samples selected.
  • Ensure that high amounts are selected as samples.
  1. Tax Documents 
  1. External Confirmations
  • External confirmations from related parties to confirm balances as of year-end.
  • Confirmations from Suppliers and Customers samples to confirm balances due to receive or pay as at year-end.
  • Bank balance confirmations as of year-end
  • Cash balance confirmation
  1. Schedules 
  • Request for Prepayments schedule, Accrual schedule
  • Samples from the schedules to be selected – (e.g. Rent Contract, Trade License, etc.) to ensure the right amount is shown in the expenses and as prepayments.  

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