How to detect and prevent corporate financial fraud in Dubai

Detecting fraud in Dubai

No organisation escapes fraud. Fraud is that consistent vulnerable aspect that hides its deceitful head and creates financial leakage in the company. With multiple ways of transactions and versatile channels, a large amount of it takes place within finances and accounting. Detecting fraud in Dubai and UAE companies has become more consequential than ever.

According to a Middle East survey findings, 48% of participants observed a surge in fraudulent incidents in 2022 compared to previous years, with 35% attributing the increase to the onset of the COVID-19 pandemic and over two-thirds of respondents expressed concerns that ongoing business and economic disruptions may elevate the risk of fraud in their organisations in the next two years. Notably, 41% of companies lack a dedicated fraud risk management and investigation team, highlighting concerns about the adequacy of the current fraud risk framework in preventing and addressing future risks.


Detect Fraud In Dubai And UAE: Different Kinds Of Fraud:

Corporate fraud refers to deceptive and illegal activities committed by individuals or groups within a company to gain an unfair or dishonest advantage or profit. These activities usually lead to minor or considerable losses to the company, putting the organisation in a disadvantaged position. Fraud can include various unethical practices in the corporate world of Dubai and UAE, such as:

1. Embezzlement: Employees misappropriate funds entrusted to them.

2. Billing Schemes: Fraudulent billing schemes, such as overbilling or submitting invoices for fictitious goods or services.

3. Cheque and Payment Fraud: Cheque fraud and unauthorised payments.

4. Expense Reimbursement Fraud: Fraudulent claims and claiming expenses that are illegitimate and inadequately supported.

5. Ghost Employees: Fictitious employees are added to the payroll for fraudulent salary disbursements.

6. Skimming: Cash receipts are stolen before being recorded in the books.

7. Financial Statement Fraud: Internal and external audits prevent manipulation of financial statements for fraudulent purposes.

8. Identity Theft: Theft of organisation, employee identity, and unauthorised access to financial records.

9. Vendor Fraud: Fraudulent activities related to fictitious vendors or inflated invoices.

10. Inventory Theft: Theft or misappropriation of inventory assets.

11. Credit Card Fraud: Credit card fraud within an organisation.

12. Misclassification of Transactions: Transactions are improperly categorised to conceal their true nature.

Effective Prevention Of Fraud In Dubai And Other Emirates:

Before we delve into How to detect fraud in Dubai and UAE companies, we need to understand prevention. As the corporate wisdom goes, effective fraud prevention and management is akin to two aspects:

  1. Corporate governance
  2. Policy making

Both of the above would translate into the following but not limited to:

  • Implementing clear policies that outline ethical standards and conduct expectations.
  • Implementing an organisational culture that values transparency, accountability, and adherence to these ethical standards.
  • Conduct periodic audits and reviews to detect irregularities or suspicious activities early on.
  • Segregate duties clearly to prevent opportunities for fraudulent activities.
  • Compliance with local laws and regulations related to financial transparency and reporting.
  • Integrating Bookkeeping for Comprehensive Fraud Prevention.


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How To Detect Fraud In Dubai Companies Through Bookkeeping:

Bookkeeping involves recording transactions such as sales and purchases, classifying them into specific accounts, and maintaining ledgers for each financial category. Following a double-entry system ensures balance and periodic trial balances verify accuracy. 

Bookkeeping is a foundational process in the broader accounting field, serving as the basis for generating financial reports, making informed business decisions, and ensuring compliance with regulatory requirements. With the advent of digital tools and software, we use modern bookkeeping, which often involves technology and AI to streamline processes and enhance accuracy.

This integrated approach creates a fortified line of defence by detecting and preventing fraud in Dubai, Abu Dhabi and other Emirates. Thus safeguarding the financial integrity of businesses in the UAE.

Hiring An External Chartered Accountant For Bookkeeping:

Bringing an external chartered accountant such as Nair and Nelliyatt into the fold is a strategic move to gain an unbiased, objective perspective on the company’s financial activities. We serve as mentors and investigators against potential fraud, equipped with the expertise to detect irregularities that might go unnoticed internally. 

An external chartered accountant adds a layer of scrutiny in conjunction with internal measures such as understanding typical fraud schemes, implementing robust internal controls, regular audits, and employee training. Our role involves:

  • Leveraging technology for real-time fraud alerts.
  • Conducting due diligence in vendor relationships.
  • Providing additional financial protection through insurance coverage.

Forensic Accounting: A crucial sought-after skill

Forensic accounting is a much sought-after method to detect fraud in Dubai and UAE SMEs. Specialised expertise involves meticulously investigating financial discrepancies, fraud, and irregularities. Armed with a combination of accounting, auditing, and investigative skills, forensic accountants play a crucial role in uncovering evidence for legal proceedings or disputes. Nair and Nelliyatt recognise the importance of forensic accounting in the battle against financial crimes, acknowledging the expertise needed to identify fraud, embezzlement, and money laundering. This specialised field aligns with our commitment to offering comprehensive financial solutions, ensuring the protection and integrity of our clients’ financial bodies.

Nair and Nelliyatt: The Best Forensic Accountants

Nair and Nelliyatt, leaders in bookkeeping, seamlessly blend advanced technology with traditional methods to combat fraud in companies. We automate data entry, categorisation, and expense tracking, ensuring accuracy and efficiency. Despite embracing cutting-edge solutions, Nair and Nelliyatt are committed to traditional bookkeeping principles, incorporating checks and balances to ensure your enterprise’s financial integrity. Combining the best of modern and traditional practices, our approach has gained us respect as trusted partners for companies seeking effective fraud detection and prevention of fraud strategies.

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