Financial Control Audit focuses on accounting, recording, and reporting of financial transactions, as well as reviewing the adequacy of internal financial controls. Financial Audit also emphasizes analysis of financial performance of a business. It aids management in its decision-making process by providing right kind of information through analyzing variability in profitability of business, unusual increase in cost, unexpected fall in Revenue, etc. Financial Control Audit helps to ensure optimum utilization of resources available within the organization.
The Financial Control Audit is different from the Financial Statement Audit. Some of the difference are as below:
What is Covered in Financial Control Audit?
The key accounting and financial issues addressed under financial control audit are:
- To check whether the accounting transactions have actually occurred
- To check for the completeness and accuracy of the accounted transactions
- To see whether cost control measures or cost reduction policies are in place
- To verify whether proper classification of transactions as per the standards and policies are made
- To check whether the transactions are authorized as per defined matrix
- To ensure that the Revenue Recognition is as per IFRS/ Accounting Standards and defined policies
- To validate the overall gross profit margin and product wise profitability analysis
- Customer credit policy with individual receivable ageing including credit limit
- Comparing Actuals vs Budget to identify the variations
- Identifying controllable and non-controllable expenses including BEP analysis
- To check whether pricing decisions are taken properly by absorbing the relevant overheads
- Identifying the cost component which can be minimized by finding the best alternative solution
How Financial Control Audit Will Benefit the User Organization?
- The effective controls over financial reporting will help the management to safeguard the company’s resources against the loss due to fraud, error, misuse, mismanagement or any other irregularities.
- It will help the Management in planning for the risk mitigating strategies, cost reduction measures and financial analysis.
- Discussion on financial performance of the business on monthly or quarterly basis (as required by the Management) to support the Management in its strategic business planning.
- This can benefit the organization minimizing the risk of fraud or any other account irregularities.
The Financial Control Audit is generally effective in identifying and mitigating the risk that the departmental financial statements may be materially misstated. Improvements will be provided proactively to involve Management through effective communication & also to ensure they understand the risk involved.
Ahmed Saleh Al Nuaimi Auditors and Accountants is a leading Auditing firm in the UAE. If you are looking for Financial Control Audit, Audit & Assurance Services in the UAE, then you are in the right place. Al Nuaimi Auditors provides highly qualified professionals in the related field of work by providing a wide range of Audit and assurance services all over UAE – Dubai, Abu Dhabi, Ajman, Sharjah, Fujairah & Ras Al Khaimah.
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