Management audit requires different approach - experts

Janak Panjuani of Puthran Chartered Accountants, said management auditors would be advisers and consultants to their customers on the audit activities directly linked with corporate objectives.

"Today's management auditor is more proactive and customer focused. They are consultants to top management by highlighting potential risks, suggesting ways to manage such risks and to improve the performance of the organisation. The auditor is expected to render value added services. The benefits may be in the form of profitability improvement, cost reduction, re-engineering of business processes, improved budgetary controls, efficient risk management, increased staff productivity, better use of technology, investment decisions, better working capital management, and compliance with legal requirements," he said at the seminar. Other speakers included Ravi P Muni of Puthran Chartered Accountants, and K K Sarachandra Bose, corporate, commercial, & contracts lawyer, Dar Al Adalah.

"Management auditor focuses on future events unlike statutory audit where auditor mainly focuses on the historical events. Without compromising the independence, management auditor will be ready to respond to the need and desire of the management. The scope of management audit is much wider than the statutory audit and requires different approach," added Muni. Four major components of management audit are Assurance, Risk management, Consulting and Control.

Legal aspects of Limited Liability Company

According to Bose, limited liability company is the best form of business structure that is suited to the businessmen in the UAE. "Even though the liability of the partners is limited to the extent of their share capital in the company, such a limited liability is subject to limitations applied by law. With a minimum of two and maximum of fifty partners subject to 51 per cent shareholding in the name of UAE national(s) and with a capital of Dh150,000 (Dh300,000 in Dubai), a limited liability can be formed."

Bose said the foundation contract of the company or memorandum of association, and all its amendments shall be written in Arabic and attested by appropriate official authorities. Memorandum of association and all its amendments shall be registered in the register of commerce and companies shall begin its function only after registration in the commercial register. Capital of the company shall only have cash share or corporeal share. "A Memorandum of Association that deprives or relieves the partners from profits or loss shall be invalid. It is required to draft the memorandum of association with adequate case and caution so that it serves the purpose of the partners and that it do not violate the provisions of the company law," he pointed out.