.svg)
Get in Touch
We would love to hear from you!
Recent posts
Auditors In UAE : 3 Factors for Considering
Kreston Menon
Deciding which auditor to hire can be a bit tedious as it involves your company’s financial stability. Ideally, the relationship between a company and the auditor should be long and beneficial for both parties. Since the stakes are considerably high in choosing the right auditors from the best audit firms in UAE, we have shared the key factors that a company needs to consider in order to choose the ideal auditor that will match its goals.
Transparent Communication
The key to any long term relationship between businesses and its auditor is to build a strong foundation of trust. The auditing firm should be transparent in the process it employs and the quality control procedures it follows. Businesses should know that the work is accurate and complete, thus an open communication is likewise essential. Audit firms that practice openness is ideal as companies can expect that even the smallest inconsistency in the audit is communicated immediately before it escalates into a larger issue. Moreover, an enviable auditing firm should ensure that the company understood the auditing process and freely answer all their questions about it.
Industry Experience
A business’ financial statement should be handled by experts with experience similar to the organization’s field or industry. Companies should do a thorough research about the background experience of the auditors in UAE. Don’t just rely on their website’s portfolio and client’s page; it’s helpful to also look into their review pages on Google and other company review platforms. Another way is to ask them for a list of references and call at least five references. Furthermore, assess on how they keep up with the evolving trend in the accounting world. This way, companies will have an idea how the auditor can prepare and face the future changes that may occur. Likewise, the auditing firm employs a meticulous review of the client’s credentials before pursuing the deal. This way, the firm maintains their standards in taking only the credible clients.
Audit Fee internal-audit-services
There’s an old saying “you get what you pay for. ’’ Basically, the quality of services will conform on the cost. It’s a little doubtful if the auditing fee is lower than usual. This will lead a company to question whether the auditor is amateur and inexperienced, thus the low fee. Essentially, the fee shouldn’t matter much but still considerable to the process. Since both parties should benefit from each other, it’s expected that the audit fee is competitive and rational.
The financial statement establishes the financial condition of the company. It supports the efforts of the business development strategy of the company, whether their plan to risk investing in another venture is profitable or not. Auditing firms are expected to determine the downfall and effects of these efforts by doing a methodical audit process. Small discrepancies in the audit could cause a lot for the business, thus hiring the ideal auditor that fits your company needs is vital.
Read More
A tailored approach to risk management processes and architecture
Kreston Menon
Risk management processes are a section of general business procedures. Procedures are utilized to oversee and screen the regularly changing risk situations.
The risk management process architecture is the outline of procedures, including their segments of sources of inputs, handling, and results. This design inventories and depicts risk management processes, each procedure’s segments and interactions, and how they work together and additionally with other processes in the enterprises.
Even though risk management processes can differ by organizations, there are some basic factors that every organization must have.
They are:
Identification of risks
This is the gathering of procedures focused at making a standard, target approach for distinguishing risk by knowing situations and surroundings. It is about the interior business context, the environment outside that business works in, and your technique as to where the business is heading. This likewise includes checking significant legal and regulatory environments in relating purviews to distinguish changes that could affect the business and its goals.
Evaluation of risks
Once an association recognizes risk, then it can distinguish what can be done to support or hinder the goals. An association needs to recognize the potential outcomes of results to what can affect it accomplishing destinations. This must include heat maps to incorporate a variety of risk evaluations and techniques (e.g., analyzing scenario, Bayesian modeling and bow-tie risk analysis).
Treating risks
After the potential conceivable outcomes are comprehended, the association needs to choose what to do. It should know what will be the best course to accomplish goals while limiting loss or harm. The objective is to optimize value and return while keeping risk inside within acceptable levels of risk tolerance.
Monitoring risks
This stage incorporates the variety of procedures to ceaselessly screen risks in the association. These exercises are the ones commonly done inside the association to screen and evaluate risks on a continuous basis.
Risk communications and attestations
Continuous procedures to deal with the communications and attestations with owners of risk all through the risk management cycle. These are done at intervals or when certain risk conditions are activated.
Successful risk management processes will offer:
Holistic consciousness of risk
This implies there is characterized risk categorization across the enterprise that structures and lists chance with regards to business and relegates accountability.
Establishment of risk culture
It must be imparted over the business to build up a risk administration culture. These are kept current, inspected, and evaluated all the time.
Decision making
This implies the business has what it needs to settle on business choices. Risk procedure is coordinated with business strategy.
Multidimensional risk strategizing
The organization needs risk examination, correlation, and situation investigation. Different subjective and quantitative risk analyzes strategies must be set up and the organization needs a comprehension of loss to impart into analysis.
Read More
Countdown to VAT: What is its Impact on Your Business?
Kreston Menon
Value Added Tax (VAT) – A tax on transaction; the concept is quite simple in theory, yet from a business perspective, the changes that the tax entails are often huge. It is a fact that the introduction of VAT system in the UAE will not just affect the end-consumers, but will have a deep impact on businesses as well. It won’t be too long to the introduction of VAT in UAE; as of Jan-2018, the UAE will introduce VAT to 5%. So in this context, let us help you get certain important concerns on VAT cleared.
What is the impact of VAT on your business – positive or negative?
VAT, in an ideal scenario, is a mechanism in which the subject supplying goods or services, can deduct the tax paid on purchases from the tax charged to buyers. Hence, the difference between the tax applied to sales and that paid on purchases will be paid to the Government. Even though this is the actual case, there may be a context wherein there is loss in the margin of business due to VAT, if sales and purchase processes are not designed with required controls. Besides, this will certainly increase the pricing of the products to the end-customer. So, the whole business model needs to be carefully reassessed.
What are the business functions that will be impacted by VAT?
The impact of VAT can be felt across several business functions. As most of us might think, VAT implementation is not just an accounting task, but also a business strategy implications for CEO’s as the outcomes will be across pricing, IT systems, supply chain, processes, policies and contracts, and even HR.
How to implement VAT changes effectively in your organization?
In order to implement VAT changes effectively across your organization, it is quite essential that you should understand the new legislation and obligations quite well, and should review the daily activities of the company without fail. Most companies will have to make few changes to their core operations, financial management, and, probably their human resources. Particularly, organizations should:
- Determine which all areas of the firm will be affected by the introduction of VAT
- Process forms, templates and documents, in order to adapt them to the new rules
- Partnering with an efficient IT Team to effectively implement changes in the IT System
- Update the accounting section and adapt the financial records
- Make sure that the incoming and outgoing invoices are compatible with the new regulations
- Adequately train HR department so that everyone understands the changes and the new responsibilities, and prepare accordingly to these aspects within the company
- Adjust the contracts with the regulations
- Review the tax provisions that are already in place
Read More
VAT Implementation in UAE : Top 3 FAQs
Kreston Menon
Yes, but this will depend mostly on the individual’s lifestyle and spending habit. While the cost of living is expected to go up a notch, don’t panic, it will be a very minimal adjustment as there will be limited taxable items in the market. In fact, Gulf Cooperation Council (GCC) states already agreed to exempt about 94 food products. Similarly, medical and educational bills are not affected unless there’s a hike in prices.
Read More
Functional Process Outsourcing – The Way Forward
Kreston Menon
Organizations, globally, have focused on outsourcing their non-core activities so as to invest further time on their core activities. One of the key processes which has seen a growing trend in outsourcing is Human Resource function. Outsourcing is a method where companies contract out a business process to an independent firm, which the firm provides as a service. In Outsourcing, the service provider is an expert in that area. This in turn gives an opportunity to the company to hire the best service provider and the organization can instead focus on other higher value-added and core activities. Studies have shown that HR Outsourcing has become a strategic decision which is taken to improve the bottom line of the company. As per Business Standards, 71% of CEOs believe human capital as their biggest contributor to sustained economic value, this statement signifies the importance of Human Resource, and hence it should be utilized to the maximum, resulting in the growth of the organization.
HR Outsourcing Trends
Human Resource Outsourcing is not a new phenomenon. Organizations have been outsourcing various components of human resource functions, such as payroll and benefits administration, for years. But off late it has become a point of discussion for one and all because, recently, giants like global Fortune 500 companies have chosen to outsource their entire HR function.
- 50-60% of organizations view employee retention as a concern
- Administrative duties & employee concerns take up as much as 70-80% of the time
- Costs associated with employee turnover range from 30-150% of employee salary
- In-house HR costs range from 20-30% higher than outsourcing
- About 54-60% of all job applications contain inaccurate information
- Analysts have forecasted the global HRO requirement to grow at a rate higher than 12%
Strategy for Outsourcing HR Functions
An organization can outsource its HR functions partially or completely. When it outsources partially, the company retains some control over the outsourced functions and may share access to information with the vendor. When the functions are outsourced completely, the organization relies upon the vendor to carry out the entire function. The strategy to outsource HR function completely or partially shall depend on the many parameters including, but not limited to, Employee strength.
Organizations with smaller employee strength (i.e. up to 150 employees) can completely outsource their HR function, since it shall reduce the cost for the organization to have HR experts of varied levels at a lower cost than hiring an FTE. On the other hand, organizations with huge employee strength, should focus on outsourcing part of the HR functions including strategic & operational HR like:
- Background checks
- Training & Management Development Programs
- Executive Development & Coaching
- Employee Benefits Administration
- Payroll
- Employee Re locations etc
Reasons for HR Outsourcing
Organizations are gradually migrating to HR Outsourcing as they have realized that if done so, there is a considerable reduction in operating costs which helps the company to save substantial money to invest in its core business. By outsourcing to service providers who have expertise in certain areas, companies are able to achieve improved legal compliance and control.
With HR functions in place, processes within the organization become more streamlined which helps the team to decide about allocation of employees to tasks. Once processes become organized, it helps to identify loopholes in resource planning and hence, reduce under utilization of resources and also develop a
suitable training plan for employees who require grooming and training. This automatically boosts the motivation of employees and increases team-work within the organization.
When there is a functional HR team in the organization, the employee performance management system is also designed appropriately for the employees. This includes proper succession plans, fair appraisal and feedback process and motivating rewards and recognition system. This motivates employees to strive harder and eventually increases the quality of work in the company.
Case In Point
One of our clients, who is a strong player in Warehouse & Logistics Management, UAE, with an employee strength of less than 100, decided to outsource its HR function, after the owners of the company were majorly involved in all the issues pertaining to employee management.
We, along with our team of experts, suggested the client to outsource its HR function to us so as to reduce their time involvement and enhance the overall HR management. In the process, we conducted a detailed HR Audit of the client to identify the areas of priorities to focus. We identified that the client did not have a proper structure for its HR functions. Functions like Payroll, Leave Management, Recruitment and Performance Management were taken care by the various divisions. For example, Payroll was managed by the Finance team, administration team took care of the Leave applications and approvals and there was no standard operating procedure followed for performance appraisals. The owners had to be involved in every decision, small or big, which took away their time to make strategic decisions.
Once we started as their HR advisors, we brought the focus on streamlining the process including implementing SOPs for leave management, financial assistance like loan and payroll, performance management, rewards and recognition process, and exit process. All these processes were performed following the UAE labor law. All HR functions included in the Employee Life Cycle were taken
care by our team; right from selecting the appropriate person for a role, on-boarding process, performance and leave management, succession plans and exit procedures. This proved beneficial for the company as when these functions were outsourced, it allowed the owners and senior management to focus on its core business and other strategic decisions. This also made up for the lack of in-house expertise.
As we took care of all HR functions within the organization, employees had a dedicated point of contact to communicate their issues. This helped employees to resolve their issues faster and better, which in turn helped them dedicate their time to their work and perform better and improve the company’s service delivery With
With this, the company could also save money on hiring a permanent full-time HR in the organization and hence, reduce operating expenses. Overall, the decision of outsourcing benefited the company to streamline its processes, to control legal risk and improve compliance and most importantly to reduce their operating cost associated with the hiring of full-time HR in the organization, to the tune of 25% of the budgeted cost were saved in the process.
Conclusion
A dysfunctional HR roadmap or ineffective HR management strategy has long-term consequences for an organization. It affects the performance of a business and the productivity levels of employees. Customer service on all fronts gets affected. The loss of customers and medium-term revenues is quite immediate.
Over a period of time, the free fall leads to an impact on the bottom line of an organization.
When human resource functions are outsourced to service providers with expertise, all processes in the organization become streamlined systematically. This automatically motivates employees to work and create a positive corporate ethos in the organization.
Read More
What’s Audit Really Worth – Beyond a Legal Requirement?
Kreston Menon
As the aftermath of this rapacious age, where trust is at the rock bottom, investors are seeking for increased transparency and disclosure. In this context, quality audit derives a higher value, which is beyond just meeting legal and regulatory requirements. While financial statements remain as a linchpin of the prevailing reporting model, most of the information sources that investors are looking to discern an organization’s strategy, business risks and model, furthermore it’s medium as well as longer term prospects, are not captured in the present-day statements. The question here is – should it be? And in case, if more of this investor relevant information is encapsulated in the company’s annual report, the next question that arises is – should an auditor’s eye on this information be valuable to investors? In the frame of reference of audit upheaval, we will discuss here, how audits must evolve in a better way to serve investors.
Unveiling the Value of Audit
As we apparently head out to a period of global growth, auditors and audit firms are found to face a turbulent series of challenges and revises. With fingers pointed across the audit professionals for almost every issue – from the substandard anti competitive behavior – to excessively comfortable relationships with clients and regulators, it has become highly important for us to know the value of audit, and perceive how auditors form their opinions. In the auditing process, the auditor will scrutinize and verify the financial information provided by the organization, which may not necessarily depict a true and fair view of the company’s state of affairs. However, since scope of such an external audit does not cover each and every transactions of the company, the auditors use all the available information sources and subject it to a lot of inspection, analysis and judgment. They perform audit procedures and gather audit evidences to provide reasonable assurance whether such financial statements in question depicts a true and fair view altogether.
Yes, audits are obviously worthwhile – they are simply worth the paper they are printed on! But as we are in the period of global growth, it seems to be a sensible time to find how the limitations of audits can be vanquished, and how these processes and outcomes could be improved.
Enhancing Audit Quality
Improving the quality of audits has been, and continues to be the initial mission of all organizations. In order to accomplish this, it’s of paramount importance that audit regulatory bodies should engage more broadly with the whole investor community in order to explore what they actually expect from corporate reporting and assurance – whether inside or outside of the financial statements. Changes in the audit field are already in progress; however, along with any regulation, a better relationship is required between the audit committees, auditors, investors, and management, to ensure that audits dispense the most value. Apart from the discussions carried out between the audit committees, auditors, and management, there should involve more direct communications between investors and external auditors, because, this could allow to some extent, for better transparency on the audit process and corroborate that the key stakeholders and the audit reports readers comprehend the information that is been presented and ensure the corporate report meets their needs.
As we know, expanding new technological advancements are already impacting the way businesses are done. And of course, audit is of no exception from this! Hence, an additional area that demands consideration is innovation – new tools and technological advancements make data review and analysis more efficient and effective, assist auditors to identify risk areas and map potential exposure better, to rise with new insights and ultimately improve the audit quality.
The Future of Audits
The future of audits can be bright, if audit regulatory bodies take into account, the wider interest of investors and if auditors can successfully deploy innovation and communication into audit procedures. And, when it comes to evolving the audit, it is a fact that changes are essentially as valuable only in as much as they help, investors to make better and informed decisions, and organizations to adopt a more resilient business strategy.
Read More
