Compliance and Auditing: Are these both the Same?

If you have been doing Business in Dubai, have you ever tried asking any Auditor in Dubai what these terms mean? Apparently compliance and auditing seem synonyms. The duties and responsibilities of compliance and audit departments look overwhelmingly similar. Both departments work in liaison, complementing each other’s role rather than working independently.

We at Aviaan have been asked by many of our curious business owners in Dubai about these terms. Here is a simple guide for you to understand these functions.

Compliance is the adherence to regulatory and statutory laws and internal controls. Auditing in Dubai, Abu Dhabi, Sharjah, UAE is the evaluation of objective assurance, compliance adherence, and implementation of internal controls.

Role and Responsibilities of the Compliance Department in Dubai, Abu Dhabi, Sharjah, UAE:

The foremost and important role of the compliance department remains the identification of risks. They need to make sure all businesses in Dubai remains within the statutory and regulatory laws. Any defiance with regulations may result in financial penalties and business risk.

Auditors in Dubai also offer specialized advice on compliance and the internal controls in place to adhere to the regulatory laws. These internal controls cover areas of Finance, Governance, and Ethical standards. Auditors in Dubai usually stress more on financial controls include adherence to the internationally accepted accounting standards. Corporate governance relates to the company structure and defining objectively clear and non-conflicting roles for each company director.

One of the challenging roles for the compliance and auditing firms in Dubai is to respond to the changing regulatory laws. With the rapidly changing corporate environment and the unique nature of financial risks, the regulations keep changing. The Compliance and Auditors in Dubai need to adapt to these changing regulations and make sure the effective implementation.

Some critical regulatory compliance may pose a business risk of failure. For example, a tech-based firm in Dubai facing a lawsuit or patent claim in the court can result in a total business failure. The compliance and auditors in Dubai need to make sure each business in Dubai has in place effective internal controls to identify and mitigate the business risks.

Role and Responsibilities of the Auditing Department in Dubai, Abu Dhabi, Sharjah, UAE:

The scope of the internal auditing department is much broader than of compliance. Auditing includes the effective implementation of internal controls and adherence to the company objectives. Our auditors in Dubai can perform special one-time inspections such as a system or stock audit.

The primary function of auditors in Dubai remains the evaluation of risk management, internal controls, and corporate governance. Auditing scope also includes the formation of effective policies and procedures to achieve the business objectives. Our Auditors evaluate business’s effectiveness of resource utilization in line with business vision within the regulatory laws.

Our auditors perform specialized auditing tasks for value creation (or value-for-money). These analytical types of auditing include evaluating business’s financial target achievement and transparency. The financial auditing aspects cover several different aspects from tax planning to efficient utilization of financial resources. For example, auditors in Dubai may advise the management on the latest VAT changes for all businesses in Dubai to reduce the tax liability.

A modern challenge for auditors in Dubai has emerged as adherence to a business ethical code of conduct. Many international corporations have been accused of breaching public trust and ethical business values. In the past decade, many corporate world giants have been accused of such practices. Tax evasion and tax avoidance have, in particular, become a contentious public debate. Thus recent challenges for auditors in Dubai include adherence to the ethical codes of integrity, impartiality, and professionalism.

Similarities and Differences in both Roles:

While the scope of auditors in Dubai is broader and covers every risk aspect for the businesses in Dubai, the compliance remains focused on regulatory obligations. Some roles and responsibilities of both these functions overlap and remain closely in liaison with each other.

Similarities:

• Risk identification and assessment for the business
• Adherence to compliance regulations and accounting practices
• Compliance with state and federal regulations
• Developing and implementing effective internal controls
• Monitoring and assessing the effectiveness of internal controls
• Identification of potential fraud and malware activities
• Tax planning, financial reporting standards, and efficiency in operations

Differences:

• In short, auditing is the assurance of compliance in every business aspect

• Performing specialized auditing tasks such as system audits, stock audits, management audits, financial audits, and so on.

• Auditing scope may include special fraud investigations

• Impartially assisting the external auditing

• Performing quantitative and qualitative tests to measure the company’s performance

• Performing an active role in corporate governance issues

• Adherence to ethical business code of conduct

The roles of compliance and auditors in Dubai should mean complimenting hands to each other. Auditors in Dubai should elaborate more on different aspects and responsibilities of both functions that overlap.

With the technological advancement, the challenges for auditors in Dubai and compliance become tangling. Both functions need to focus on the latest business threats and fraud prevention. The technological advancement presents a two-edged sword for businesses in Dubai as it also equips the fraudsters equally.

For enquiries, call +971 5679 52590 / E-mail: info@aviaanaccounting.com

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