Whether in the UAE or any global setting, the year-end proves to be a bustling period for businesses. Right from expenses and income to audit plans, investments, and payroll processes, every aspect of the company undergoes a meticulous review and compilation, leaving no detail unexamined, down to the last penny. Despite being a complex, lengthy, and overwhelming process, companies in UAE can simplify and streamline it by adhering to key points and utilizing checklists.
In this write up, let’s explore how businesses can optimize their accounting practices and annual tax filings through the effective use of checklists.
We shall also see the key components that the checklist should include to ensure a comprehensive and streamlined approach.
An integral part of these procedures is verifying that your records correspond to the actual bank statements and credit card transactions. If discrepancies arise, it indicates potential errors, necessitating adjustments to one of the records to achieve balance parity, such as rectifying interest amounts. This process also encompasses reconciling accounts payable and receivable, with adjustments made for any outstanding invoices or pending payments. It is always advisable to get the balance confirmation from your vendors/suppliers and customers so that the correct closing balance is reported in the financial statements.
Collection of pending dues:
Before finalizing the year-end balance sheet, it is advisable to address any outstanding dues and gather payments that clients are yet to fulfil. The process of collecting pending dues can vary; some clients may respond to a polite reminder, while others may require repetitive prompts. Offering feasible and realistic instalment plans is a recommended approach. The key lies in understanding the client’s concerns and tailoring the collection process accordingly.
For businesses dealing with inventory, physical counting is required to verify the stock levels. In case of any discrepancies, the records are to be adjusted and accounted for obsolete or damaged inventory. Neglecting or bypassing this step can lead to significant losses for the business.
Fixed Assets Review:
At the end of every fiscal year, it is essential to assess the condition of fixed assets and update the depreciation schedules. Disposing of obsolete assets should be considered to ensure that the remaining assets are accurately reflected in your books.
Bad Debts Evaluation:
Evaluating the outstanding receivables and assessing the likelihood of collection becomes important too. In addition, necessary adjustments for bad debts are to be made, to ensure that your accounts receivable accurately represents realistic expectations.
Ensure Compliance with Tax Obligations:
The next important aspect is to verify compliance with all tax obligations, including Value Added Tax returns. Accurate and timely filings are crucial to avoid penalties and legal complications.
Review Employee Records and Payroll Accuracy:
The employee records are to be scrutinized for accuracy, so as to ensure compliance with necessary labour regulations. A thorough review of payroll calculations is to be taken up along with necessary adjustments.
Prepare for External Audits:
If your business undergoes external audits, the required documentation and schedules are to be prepared. Any concerns raised during the audit process will have to be addressed and corrective actions will be proactively implemented there on.
Ensure Document Retention Compliance:
The financial documents, contracts, and records are to be reviewed and stored safely/saved electronically as per local regulations. This ensures easy accessibility for audits or reference, maintaining compliance with record-keeping requirements.
Compiling the Financial Statements:
Finally, the most important step in closing the fiscal year is to gather all the necessary financial data from all sources and compile the company’s financial statements. These include statements such as Balance sheet, Profit and loss statement, Cash flow statement and other relevant financial documents. It is crucial to verify the accuracy and completeness of these statements since they will be utilized for decision-making, tax reporting, and various other purposes.
Simultaneously, it is essential to convey the financial well-being of the business to stakeholders via these reports and associated presentations. And further address concerns voiced by investors, shareholders, or board members if any.
In conclusion, closing the fiscal year is an intricate undertaking demanding meticulous planning and attention to detail. By adhering to a comprehensive year-end accounting checklist, businesses in the UAE can ensure a seamless and accurate closing process. This, in turn, will empower them to make informed decisions and lay the groundwork for a successful upcoming year. Also, this year audit is very important due to the implementation of Corporate Tax as the closing balance of any ledger will have direct impact on the tax liability. Therefore, business owners are advised to ensure that this year’s audit has covered most of the above points.
Considering the intricacies of year-end accounting and the potential repercussions of errors, depending on the proficiency of a reputable accounting firm such as BCL Globiz becomes imperative. Entrusting your year-end accounting to seasoned professionals of BCL Globiz ensures meticulous execution, preventing costly mistakes, and safeguarding your organization from potential legal penalties.