NR Doshi and Partners are always ready to go the extra mile for every client. We aim to provide top-notch service without failing to deliver complete client satisfaction. In this case study, you will find out how we conducted a statutory audit for our client, listed all the errors, and provided advice to rectify them.
The client for whom we conducted the statutory audit owns an entity in the United Arab Emirates, whereas the parent entity is in India. The company is one of a kind, which makes auditing challenging as well as thrilling.
The challenge:
The company used to follow AS (Accounting Standards) not only for the parent entity but also for the entity situated in the UAE. As per the UAE laws and regulations, accounting should be performed as per IFRS, GAAP, or similar internationally recognised standards.
For that reason, the company needed to switch from AS to Ind-AS, which is considered equivalent to IFRS and accepted by the authorities in the UAE. In order to make financial accounts and reports of Indian companies internationally acceptable, the Accounting Standards (AS) need to be harmonized with IFRS; convergence to Ind-AS from current accounting standards is required to happen in a phased manner.
Ind-AS shall be adopted by specific classes of companies based on their net worth and listing status. One of the important conditions of convergence is that if Ind-AS becomes applicable to any entity, then it automatically becomes applicable to all its subsidiaries, holding companies, associated companies, and joint ventures of that company.
If an Indian company has foreign operations, then the stand-alone financial statements can be prepared as per the local requirements of that company, but it is required for these entities to report their Ind-AS figures for their Indian parent company to make consolidated Ind-AS accounts.
Adopting a different standard requires recalculation of all the previous data and passing necessary entries in the books of accounts to that effect. It changes the way in which the financial statements are prepared; it also changes the way of presentation of financial statements and modifies the principle of recognition & measurement of financial transactions.
A transition to Ind-AS, thus, has a qualitative and quantitative effect. At the time when we conducted the audit, it had been fifteen years since the company started. Therefore, all the data of those fifteen years was as per the Indian Accounting Standards. To ensure the transition from AS to Ind-AS was directed smoothly, auditing of data generated in fifteen years was required to be performed.
The task wasn’t facile, but NR Doshi and Partners’ auditing team is always determined to take every challenge as an opportunity to prove ourselves better than others.
Challenge Accepted:
It’s a huge challenge to perform a transition from AS to Ind-AS, as there are many differences between AS and Ind-AS. With the active involvement of the client management and support of various departments like Finance, IT, Compliance, etc. we were able to manage the transition successfully.
Since we were required to conduct the audit of the data collected over fifteen years, it required a team of experienced individuals who have knowledge of all significant Ind-AS and schedules. It also required a high degree of professional judgment in identifying the transition impact and making the required disclosure notes.
Conversion from AS to Ind-AS is a strategic matter. We started by developing a roadmap considering various factors like internal control framework, accounting software support, risk management objectives, and legal & regulatory framework.
Further, the transition process involved not only accounting but also the control framework, people aspects, process refinement, and had a technological impact.
The roadmap was prepared by assessing the potential impact on each department in the organization, viz. accounts, HR, Compliance, and IT. After going through all the financial statements, we explained the various frameworks.
We analysed the impact of Ind-AS on standalone and consolidated financial statements, determined the IFRS-related implications of the adoption, and identified the magnitude of change for the company.
We suggested suitable changes in the chart of accounts structure to accommodate additional chart of accounts. We also developed the change management strategy and suggested necessary changes in processes. The whole process took fifteen days, during which we detected significant errors.
They accepted the errors identified by us and worked to rectify them. At last, we also facilitated the knowledge transfer for ongoing compliance with the Ind-AS reporting. As you can see, we not only provide the opinion but also give guidance to remain compliant with the law. We were able to ensure that they remained compliant with the laws.
Conclusion:
After the company rectified errors, we conducted the statutory audit again, and then the statutory audit was completed, and financial statements were signed. The Audited financial statements were then filed with the government authorities. This also helped the company to maintain an excellent reputation in front of stakeholders and customers.
The client was happy with the value addition done by NR Doshi in terms of a smooth transition to Ind-AS, standardization of accounting processes in compliance with Ind-AS, and greater consistency in the application of accounting policies.
NR Doshi’s Audit and Assurance Service
Audit and assurance services are provided for companies so that stakeholders can have a true and fair view of their financial position. It helps in checking whether books of accounts are accurate and UpToDate and internal controls are working as intended, detecting fraud, providing advice regarding better management, etc.
We ensure that our statutory audit services in Dubai are the best amongst all audit firms in the UAE, which function as per the law and regulations, keeping your company compliant with the local and international auditing and accounting standards.
Independent auditing must be performed by a reputed auditing firm in Dubai, such as NR Doshi & Partners, which is approved by all the banks in the UAE.
Choosing the right audit partner matters as much as the audit itself. As a leading audit firm in Dubai with 40+ years of experience and DFK International membership, we help businesses navigate exactly these kinds of requirements.
