Audit Readiness for Manufacturing Companies in UAE

Paperwork to keep up to date

• Stock listing by category valued at cost
• Bills of materials with current prices
• Production and wastage reports by period
• Fixed asset register with machine IDs
• Import and customs documents linked to purchases
• Aged payables and receivables with supplier statements

Costing a manufactured product

Inventory value in a factory has three layers: raw materials, work in progress and finished goods. Each layer needs a cost method applied consistently, whether standard cost, average cost or first in first out. Record which method you use and keep it the same from year to year, or document the reason for any change.

Finished goods cost should include materials, direct labour and a fair share of production overhead such as factory rent, machine depreciation and utilities. Selling and head-office costs stay out. If overhead is allocated using machine hours or labour hours, keep the calculation and the hour records behind it.

Yield, scrap and variances

Every product has an expected usage of material per unit. Compare actual usage with the bill of materials monthly and investigate variances above a limit you set. Scrap should be weighed or counted, recorded with a reason, and approved before it is written off.

A purchase price variance is where you paid more or less than the standard price. It belongs in the cost of sales or inventory depending on your method. Leaving variances unexplained in a suspense account is one of the quickest ways to lose a reviewer's confidence in the stock figure.

Plant, spare parts and capacity records

Production machinery is usually your largest fixed asset. Keep purchase invoices, installation costs, commissioning dates and a maintenance log, and decide which repairs extend the machine's life and which are running costs. Spare parts held for critical machines can be a stock item or an asset depending on use, so apply a clear policy.

Capacity and output records support the story the numbers tell. Daily production reports signed by the shift supervisor, agreed to goods received into the finished goods store, make revenue and stock easier to test.

Review idle or obsolete machines each year, with a note on whether they can still be used or sold. This keeps the asset register free of equipment that no longer produces anything.

Common gaps in manufacturing company accounts

Our preparation process

Our scope, stated plainly