Financial Statements Audit

Financial Statements Audit

A financial statements audit is a professional service rendered by an independent auditor to examine and assess the financial statements of a business entity and express an objective opinion on the extent of fair presentation of these financial statements and whether these are free from material misstatements based on audit evidence that the auditor obtains from the audit procedures performed in accordance with the International Standards on Auditing (ISA). This service culminates in the issuance of the auditor’s opinion through one of the following four types of the audit report as specified under ISA:

  1. Unqualified Opinion (Clean Report)
  2. Qualified Opinion (Qualified Audit Report)
  3. Adverse Opinion (Adverse Audit Report)
  4. Disclaimer of Opinion (Disclaimer Report)

Who are the beneficiary users of audited financial statements?

The beneficiary users of audited financial statements are the owners or shareholders who seek to identify the business results of the entity over the financial year in addition to other stakeholders, including:

  • Ministry of Commerce and Industry for renewing commercial licenses.
  • Regulatory authorities that supervise business entities.
  • Banks and financial institutions for securing banking facilities.

Why do business entities record their financial information and prepare financial statements?

Business entities record their financial information to take it as a basis for preparing their financial statements. The overall purpose of the financial statements is to provide various stakeholders with the information they need about the business results, financial position, and financial performance of a business entity. Stakeholders use this information to analyze the financial performance of the business entity and make informed decisions in connection therewith accordingly.

What are the authorities with which Baker Tilly’s auditors are registered?

An independent auditor license is issued by the Shareholding Companies Department in the Ministry of Commerce and Industry. Thus, the auditor’s license is valid within the State of Kuwait’s jurisdiction. However, certain regulatory authorities require a special registration of auditors with additional requirements.

Baker Tilly’s independent auditors are registered at the following bodies:

  • The Capital Markets Authority (CMA)
  • The Insurance Regulatory Unit (IRU)
  • The Oil Sector
  • The Banking Sector

Who are Baker Tilly’s licensed auditors?

Baker Tilly has two licensed auditors, namely:

  • Mohamed Hamed Al-Sultan, Auditor License No. 100, Class A.
  • Ali Mohamed Al-Hamad, Auditor License No. 111, Class A.

What are the qualifications of Baker Tilly’s audit team?

Baker Tilly has a highly qualified and professional audit team with extensive experience in financial audit.

What are the tools that Baker Tilly uses in auditing financial statements?

Baker Tilly uses the cutting-edge “Global Focus” software, which covers the full audit cycle from planning through fieldwork to reporting. This software ensures that the audit process is executed with the highest level of accuracy and tasks are completed rapidly, and integrity of deliverables.

What are the legislations that should be observed while preparing and auditing the financial statements?

The financial statements shall be prepared and audited in accordance with the statutory requirements, regulatory rules, resolutions, and instructions issued by the following administrative and regulatory authorities:

  • Ministry of Commerce and Industry
  • Capital Markets Authority (CMA)
  • Central Bank of Kuwait (CBK)
  • Insurance Regulatory Unit (IRU)

What are the mandatory standards that business entities should adopt in preparing financial statements?

The administrative and regulatory authorities mandate business entities to apply the International Financial Reporting Standards (IFRS) in preparing financial statements.

What are the mandatory standards that independent auditors should adopt in auditing financial statements?

The administrative and regulatory authorities mandate independent auditors, including certified accounting or audit firms in the State of Kuwait to adopt the International Standards on Auditing (ISA) in auditing or reviewing the financial statements of business entities.

What is the professional entity concerned with the accountancy and audit profession in Kuwait?

In the State of Kuwait, there is a public benefit society representing the accounting and audit profession, i.e. Kuwait Accountants and Auditors Association, which aims at organizing its members’ affairs including auditors and accountants, and developing the profession according to the best international practices.

Are all companies required to prepare annual financial statements?

All companies shall prepare financial statements and have them audited and approved by an independent auditor in accordance with the provisions of Companies Law No. 1 of 2016 and the Executive Regulations thereof, as amended.

What is the timeframe for filing financial statements to the administrative and regulatory authorities?

The unaudited interim financial information should be filed within 45 days from the end of the quarter, while the audited annual financial statements should be filed within 3 months from the end of the entity’s financial year.

What is the added value to business entities from the Audit of Financial Statements?

  1. Ensuring soundness and integrity of financial statements and information promoting the entity’s reputation and avoiding associated risks; and
  2. Enhancing confidence in the financial statements and financial or non-financial information, which helps shareholders and stakeholders (investors, regulatory authorities such as Central Bank of Kuwait, Capital Markets Authority, Ministry of Commerce and Industry and Insurance Regulatory Unit, in addition to other parties such as banks, credit rating agencies, finance companies, clients, etc.) make informed decisions as appropriate.

What are the services offered by Baker Tilly Kuwait?

Audit of annual and interim financial statements and issuance of independent auditor’s report