Financial Statement Audit & Internal Control Review

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3/5/20223 min read

white concrete building during daytime
white concrete building during daytime
Financial Statement Audit

The Auditor gives reasonable assurance regarding the integrity of the company’s financial information and its compliance with the International Financial Reporting Standards (IFRS) on the other hand, in the Auditor’s report on the Audit of financial statements. An independent auditor examines an entity’s financial statements and supporting disclosures in a financial statement audit. The audit method of the firm is built on getting to know the client, including their industry, organizational structure, and internal control systems.

This study yielded an auditor’s report attesting to the financial statements and related disclosures fairness. The Auditor’s report must be included when the financial statements are distributed to the intended recipients.

Independent Auditors play a critical function as a trusted intermediate between the sources of business information and the users of that information. We feel that independent auditors are on the verge of a transformation as a result of the recent economic crises and scandals.

Under Kuwait’s firms law no. 1 of 2016 and its executive regulations, as modified, all companies must have their financial statements audited. All listed firms, financial institutions, and other companies subject to the Kuwait commercial companies law must follow the international financial reporting standards (IFRS).

Financial statement audits are important in establishing and retaining investor confidence, as well as providing significant business insights.

All corporate entities are required to present audited annual financial statements to the Ministry of Commerce and Industry, The Capital Markets Authority, and the Central Bank of Kuwait.

This will help shareholders and stakeholders (investors, regulatory authorities such as the Central Bank of Kuwait, the Capital Markets Authority, or the Ministry of Commerce & Industry, and other parties such as banks, credit rating agencies, finance companies, customers, and so on) make informed decisions.

Unaudited interim financial information should be submitted within 45 days of the quarter’s end, while audited yearly financial statements should be submitted within 3 months of the company’s fiscal year’s end.

In a nutshell, the Auditor’s report on the audit of financial statements focuses solely on the company’s financial statements sound presentation, whereas the auditor’s report on the internal control review focuses on the availability of internal controls for all organizational structure units, which helps ensure the accuracy of reporting issued to the board of directors and, thus, the shareholders. As a result, from a regulatory standpoint, both findings are complementary.

Internal Control Review (ICR)

Internal Control Review (ICR) is a comprehensive review of an organization’s internal control system and its appropriateness in addressing relevant risks in each business area. Internal Control Review directs, monitors, and measures an organization’s resources effectively. It is crucial for the organization’s actual and intangible assets to be safeguarded.

Internal Audit, on the other hand, is “an activity that provides independent, objective assurance and consulting activity aimed to add value and improve an organization’s operations,” as described by the Institute of Internal Auditors. It helps a company achieve its objectives by assessing and enhancing the effectiveness of risk management, control, and governance systems in a methodical, disciplined manner.

Internal control is also defined as “a process effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories” by the committee of sponsoring organizations of the tread-way commission (COSO).

  1. Operational effectiveness and efficiency.

  2. Financial reporting’s trustworthiness.

  3. Observance of all relevant laws and regulations.

According to Capital Market Authority “CMA” executive by law module 15, an Independent Audit firm shall be assigned to analyze and review internal audit systems and write a report in this respect (internal control report), which shall be submitted to the authority once a year. As a result, choosing Internal Control Review services that are compliant with the capital market authority’s regulations.

Looking for a Certified Auditor to avail reasonable assurance regarding the integrity of the company’s financial information and its compliance, contact us to know more. | (+965) 6616 2610