Fraud Investigation Audit in Dubai, UAE

Corporate fraud has many negative economic effects on businesses. It involves harm to the business's reputation, a decline in investors’ confidence, higher finance charges, and a decline in the corporation's worth.

Dubai, the United Arab Emirates' economic and financial Centre, is no stranger to fraud cases. There have been numerous high-profile examples of fraud in the city in recent years, ranging from embezzlement to money laundering.

A report by the Association of Certified Fraud Examiners found that Dubai fraud costs businesses around the world approximately 5% of their yearly income. The ACFE’s 2020 Report to the Countries examined 2,690 cases of occupational fraud that resulted in a net loss of more than $7.1 billion.

As a result, numerous businesses are increasingly performing fraud investigation audits in Dubai. AFD assists in preventing this kind of fraud from occurring.

Fraud is described by ISA 240 as purposeful conduct by one or more persons among management, those accountable for governance, staff, or third parties, including the use of deception to acquire unfair or unlawful advantages.

What is a Fraud Investigation Audit?

Fraud investigation audits are a crucial tool for stopping and spotting fraud in a business. They can assist businesses in cost savings and reputation protection. A team of professionals will analyze a company's finances and operations in-depth as part of a fraud investigation audit.

Audits of fraud investigations may involve evaluating financial records, speaking with personnel, and examining internal controls. They may be carried out by internal audit divisions or by external audit firms in Dubai. The auditor may carry out fraud audits on a routine basis or in reaction to a particular incident.

At the end of the entire audit procedure, the auditor presents an audit report containing comprehensive and extensive details about how a firm operates and any fraud that may occur there.

Types of Fraud Investigation Audit

There are two types of fraud investigation audit:

  1. Asset Fraud and Misappropriation
  2. Financial Statement Fraud

Asset Fraud and Misappropriation

Misuse of assets is a common form of fraud in businesses. There are typically two categories of misappropriation, namely:  

  • Stealing money intended to be handed to an organization – Because cash transactions aren't recorded, it's difficult to detect such crimes. Therefore, it is very easy to conceal this fraud. Fake expenditure reimbursements, fake billing strategies, and manipulated cheques are some examples of it.
  • Misappropriation of corporate resources – This asset misappropriation involves the misuse of numerous firm assets by a person or a group of people. This fraud is extremely troublesome. It would not only expand the company's liabilities but also show that its assets have been used without authorization.

Financial Statement Fraud

Fraudulent financial statements can be fatal for a business. The act involves taking false representations regarding income, resources, etc., or hiding liabilities to present investors with the impression that there are more assets than liabilities. Even though profitability has not increased significantly, the financial statements will be manipulated to make it appear as though it has.

Audit Procedures of Fraud Investigation

Although audits aren't meant to catch each case of fraud, they have to find significant inaccuracies in a company’s balance sheet that could be the result of fraud. Keeping accurate books and accounting are only the first measures of protection against fraud. Several fraud detection techniques must be used throughout each audit regardless of the organization. These include:

Brainstorming Session on Fraud

According to generally recognized corporate governance principles, audit engagement teams are required to attend a planning session on fraud at the start of the examination. It gives the auditing group time to think about the fraudulent activity the organization might commit. The purpose of this session is to establish a professional judgment throughout the audit. The fraud expert present during the meeting discusses previous frauds done by businesses. It helps them determine the client firms’ potential risks.

Also read: Benefits of Forensic Audits in the UAE

Journal Entry Examination

The auditor examines the firm's journal entries for any indications of falsification, as conducting substantial financial statement fraud necessitates changes to the company's financial data. The auditor learns about the controls and practices of the business. He then chooses the firm's journal entries to use for this test. Huge entries made by high management, late postings to the accounting cycle, or other noteworthy transactions are frequently chosen by auditors in Dubai. The auditor requests relevant documents to verify each entry after the selections have been finalized.

Financial Estimates

Fraud is probably present in the accounting estimates area. Due to the subjectivity of accounting estimates, managers may be able to sway them to falsify financial information. To ascertain whether the process for producing accounting estimates has altered from the previous year, auditors first do a look-back approach. Methodological changes could also be an indication of fraud. Auditors in Dubai also look at the general directional cues of the estimations.

Major Irregular Transactions

Auditors are now required to carefully review substantial anomalous transactions that are not part of a company's business activities. Businesses describe the transaction's goal and financial justification for this analysis. The consulting firm should confirm the company's explanation with additional data gathered throughout the audit once the auditor has obtained management's explanation.

Continuous Reviewing

The organization's management needs to analyze its operating and financial statements regularly. By implementing internal control programs and conducting independent investigations, an organization can identify any fraudulent behavior and stop further operations.

Using an independent auditor can be quite beneficial if the business can afford it. The expert will take an in-depth look over how the business operates and assist you in creating corporate practices that would prevent fraudulent actions from continuing.


In the complex economic environment of today, businesses are dealing with challenges that put their financial operations in jeopardy. The leading audit firms in Dubai offer impartial, objective support for the application and functional effectiveness of your business controls. It is suggested to hire a reputable auditing firm in Dubai so that you can detect and prevent any fraudulent activities within your business.