In the recent past, there have been significant changes in the business landscape in Dubai and UAE in general. Free movement of people, increase in globalization, smooth communication, technological evolution have helped modify the business environment. These factors, among others, have multiplied the growth of established companies in Dubai and the sprouting of new ones. But the development of these firms has also attracted massive fraud and financial crimes.
Most businesses in Dubai, UAE, have separate in-house chartered accountants to monitor all business operations and reduce irregularities in the company recordings. But, still, fraudsters come up with new and innovative crime activities that require in-depth analysis of the books of accounts and records to uncover.
This has led to the rapid growth of forensic auditing, which can be described as integrating investigative and accounting skills. Continue to read to discover more about forensic audit techniques that certified forensic auditors leverage to uncover financial fraud and crimes.
What is Forensic Auditing?
Forensic auditing is an accounting form that checks in detail a company’s different financial records to identify any signs of fraud being committed. Forensic audit firms also provide deep analysis of the financial books, which can be submitted to the court of law.
Forensic auditors are considered detectives in the business and economic fields. These professionals check every transaction to identify illegal or fraudulent activity in the industry. One needs some specific skills to become the best forensic auditing firm in Dubai.
Forensic audit services help Dubai companies to reduce their losses and improve efficiency, eventually resulting in greater profitability. Moreover, it can help senior managers monitor different business activities and stop fraud from occurring.
Here are some essential forensic auditing techniques you should know:
- Auditing Fraud Investigation Process
- Conducting background checks and reviewing public documents
- Interviewing in detail
- Collecting information from reliable sources
- Analyzing the evidence collected
- Performing surveillance
- Working undercover
- Taking a closer look at the financial statements
1. Auditing Fraud Investigation Process
Various techniques can be employed to conduct a forensic audit of a business. Below are some generic yet effective techniques. Most of these techniques can be applied to any business. They include:
2. Conducting background checks and reviewing public documents
Public documents are carefully scrutinized since they are the easiest to obtain. In addition, extensive background checks are conducted on a particular business to ascertain the company’s past performance. These include any information accessible through the public database, corporate records, and legally accessible information available via the internet.
3. Interviewing in detail
Interviewing is an integral part of generating valuable information from an unwilling person. This step aids in gaining a complete understanding of the situation. To conduct an effective interview, one must determine the gravity of the situation and prepare questions accordingly. The discussion should consider every detail and consider the overall picture to determine the scope of the illegal activity and the perpetrators.
4. Collecting information from reliable sources
A confidential and reliable source of information can prove invaluable in any situation. Suppose information is gathered from a confidential source or an informant. In that case, all measures should be taken to conceal the source’s identity. Forensic accountants should attempt to obtain as many confidential sources as possible since they can virtually guarantee the accuracy of their conclusions.
5. Analyzing the evidence collected
An adequate analysis of the obtained evidence can identify the responsible party and assist in determining the extent to which fraud was committed within the business. This analysis will also provide insight into the level of security that the company has against financial scams and how various austerity measures can be implemented to prevent similar situations in the future.
6. Performing surveillance
One of the conventional methods of uncovering fraud involves conducting physical or electronic checks. One way of doing this is to monitor all official emails and messages.
7. Working undercover
A measure of this magnitude should be employed only when all other options are exhausted. Professionals should investigate since they know how and where to conduct it. Even minor mistakes may alert the offender that something is amiss and may disappear.
8. Taking a closer look at the financial statements
The purpose of this tool is to identify the fraud committed. Financial statements contain all the necessary details. An analysis of these statements can assist a forensic accountant in determining whether a scam has been perpetrated.
Economic conditions are becoming increasingly severe today, and each country’s government is enforcing stricter laws to govern its businesses. As businesses’ sophistication increases, so do fraud. Consequently, it has led to heightened sensitivity to fraud, resulting in a massive demand for forensic accounting services by all businesses.
As a result, it can be understood that forensic auditing is a task best left to professional auditors who can offer you solutions to business problems that are tailored to your requirements.
If you are looking for forensic audit services in the UAE, look no further. Audit Firms in Dubai will handle all your business and financial needs. Additionally, we offer forensic accounting and auditing services, among others. To get more information about the services we offer, don’t hesitate to contact us – we’d be glad to assist you.
Kasun Liyanage is an Audit Manager with over 7 years of experience dealing with diversified corporate clients. He not only manages the team’s work schedule but also is an expert in handling audit areas such as external audits and fraud investigation, Internal control benchmarking and best practices and well as preparation of financial statements and IFRS compliance.