Finalization Of Financial Statements
Proper financial settlements and auditing are essential to keep business competing in today’s vibrant market conditions. AHG, one of the leading accounting and auditing services companies in UAE evaluates whether your business entities comply with international accounting standards such as IFRS. Our Finalization of Financial Statements in Dubai involves verification of accounting records and assessment of other data supporting the financial statements.
Finalization Of Financial Statements
It is necessary that business owners in Dubai and in UAE should analyze the financial data on a regular basis to ensure the smooth functioning of their business. You must be aware of the output that you receive from your financial professionals. This will help you determine the financial position of your company at a specific point in time and over a period of time.
The financial statement is finalized on the basis of the information from your general ledger and accounting journal, the income statement, the balance sheet, the statement of changes in equity, the statement of cash flows, and the information from the previous statement.
1. The Income Statement
It is the Profit & Loss account and prepared on the basis of the information on sales revenue and expenses.
The Income Statement shows the following details:
- The total profitability of your company for the time period
- The returns from primary income sources, such as sales of the company’s products and services
- The revenue from secondary sources: leases of a portion of the company’s business premises
- The Revenue on sales of equipment or income on interest
- The business expenses for the time period
- Losses from any activity, including current depreciation
- Adjustment of provision to safeguard from future unexpected losses.
2. The Retained Earnings Statement/ The statement of Changes in Equity
It is the second financial statement a company must prepare in the accounting procedure. It shows the profit retained by the company for its growth, and that are distributed as dividends. Before preparing the statement of retained earnings, the net profit or loss must be calculated. It shows the movement in the equity of the company. Proper balancing of equity with the liability and assets is one of the factors deciding the liquidity position of the company.
3. The Balance Sheet
The Balance Sheet shows the financial position of a company pertaining to the assets, liabilities, and equity of the company. The assets of the company must be equal to the total of the liabilities and equity of that company. By analyzing the balance sheet, the investors or the owners of the company can understand where their company stands.
4. The Cash Flow Statement
The Cash Flow Statement is prepared last because it includes the information from all the other three previously prepared financial statements. It shows the operating cash flows, investment cash flows, and financing cash flows. It gives the owner a complete picture of the cash position of the company, i.e. the position of the cash inflows and the position of the cash outflows. This statement helps the company make a decision towards the diversification of the business or whether further investment is required or not.
Introduction of Financial data
In lines with Dubai Government DOF’s vision of the importance of sharing and making the financial statements available to all levels inside and outside Dubai, with the diverse needs and requirements of vital sectors in the economy. Also, contributing to the empowerment of the society and its various sectors and investors at home and abroad to access the information and financial data that supports the economy of the Emirate, and ensure understanding of the society’s needs and achieve the requirements of global competitiveness; Therefore, in this context, DOF has prepared the financial dashboard, which includes many financial statements and global financial indicators, as per IMF’s ratings and GFSM index, enhancing confidence in financial sustainability and emphasizing the robustness of Dubai’s economy.
Financial reporting structure
It is mandatory for free zone businesses in the UAE to prepare the annual financial statements in agreement with the International Financial Reporting Standards. All other companies or partnerships limited by shares in the UAE, subject to any other obligations, have the possibility to prepare their financial statements in accordance with any normally excepted structure, but most of the units do follow IFRS. Subsidiary corporations of listed companies that are registered in other territories have the possibility to prepare the financial statements in agreement with the structure followed by the parent company
Audit requirements for listed companies in Dubai
In the UAE, the following types of companies must have an audit at any time in the financial year if they are:
- joint-stock companies;
- limited liability companies;
- affiliations or partnerships limited by shares;
- any other business which is mandatory by any other law.
Small companies in Dubai are audited when they are required to do so by any supervisory unit or financial institution or to meet any other special condition.
What is the fiscal year?
The fiscal year represents a period of 12 months in which a full accounting cycle takes place in a company. However, the fiscal year is not meant to be the same as the calendar year, but in the case of the UAE, this starts on January 1st and ends on the 31st of December. The preparation of the annual financial statements for companies in Dubai can start before the fiscal year is over, leaving time for different adjustments and modifications.
Financial statements include the balance sheet, income statement, statement of cash flow, and statement of shareholder equity. These are the standard reports required to be prepared during a statutory audit in the U.A.E.
Annual financial statement includes:
- Balance sheet
- Profit and loss report
- Cash flow statement
- Notes
Financial Year in UAE
International Financial Reporting Standards (IFRS) are required for Dubai limited liability companies. Each year, holding enterprises are required to prepare and present enhanced audited financial statements in accordance with IFRS. Transitional holding companies are not required to consolidate. According to official accounting criteria, consolidated financial statements will be prepared by a holding company. For the preparation of annual financial statements in Dubai, our accountants in Dubai can provide you with the necessary information and assistance.
Fiscal year
In a company, a fiscal year corresponds to a complete accounting cycle of 12 months. As for the UAE, the fiscal year begins on January 1st and ends on December 31st. However, it does not match the calendar year. Dubai companies can prepare their annual financial statements before the fiscal year ends, allowing time for adjustments.
Financial statements include the balance sheet, income statement, statement of cash flow, and statement of shareholder equity. These are the standard reports required to be prepared during a statutory audit in the U.A.E.
AHG offers monthly, quarterly, semi-annual and annual financial statements (statement of financial position, statement of comprehensive income, and cash flow statement & owners’ equity statement). Our reports can be arranged for both in Arabic & English. As well, AHG exclusively allows its clients to obtain their reports online for time saving and archiving proposes.
Your operations will focus on business growth, since we secure accurate and reliable reports on a timely basis. Subsequently, this will accelerate your decision making process.