Financial crime is among the risks that companies in the United Arab Emirates face; however, does whistleblowing really make a difference? This is something that businesses, established or not, want to know. Quite possibly, if organizations fail in having a secure system for whistleblowing in place, they’ll fail in doing everything they can in order to reduce risks of financial crime. Also, when this happens, the businesses are weakening their trustworthiness in terms of financial reporting for business operations.

Whistleblowing in the detection of financial crime

There are statistics on whistleblowing and financial crime. In a recent survey, participants reported a third of whistleblowing cases that are related to financial crime in companies, fraud, and money laundering. Further, as per the Certified Fraud Examiners Association’s Report to Nations 2018, financial statement fraud and corruption are some of the costliest forms when it comes to occupational fraud. Fraud losses are fifty per cent less with organizations that have whistleblowing systems in place compared to those without. Businesses in the UAE without any whistleblowing reporting channels have twice as many cases of fraud detected by the external auditor by accident.

New legislation in the UAE will soon make secure systems for whistleblowing hotter in the industry of finance.

How whistleblowers can help against financial crime

Whistleblowers are the ones that expose activities or information that are deemed unethical or illegal. Historically speaking, they have played major roles in helping businesses protect their economic interests and clampdown wrongdoing within organizations.

Whistleblowers that report any suspicions, even with money laundering, typically have inside knowledge that's vital for fighting against crimes. However, they are also in vulnerable positions. The knowledge that they hold can mean employment jeopardy as they are often working for the same business as the person(s) committing crime(s). Consequently, they are subject to pressures in remaining silent even with threats of loss of employment and/or violence. While whistleblowers are protected in the UAE, many don't necessarily feel that they have protection when they sound the alarm within an organization.

Forensic accounting services

While the responsibility will rest on the board, forensic accounting services in UAE are typically tasked in principal oversight of whistleblowing systems and detection of fraud. Forensic accountants have direct responsibility in implementing anti-fraud efforts which also involve auditors in UAE. As a crucial first step in fraud risk oversight, forensic accounting services include making sure management of the business has correct measures for fraud risk management.

Experts make sure that they are properly informed, as well as actively engage with the overseeing of the process while also avoiding taking responsibilities or roles of management.

While setting up effective whistleblowing systems, forensic accountants make sure to eliminate barriers with effective whistleblowing, which can include:

Operational – Forensic accounting services see if the whistleblowing process has been embedded fully within an organization. Staff members are briefed as to what to do as well as what to watch out for. Experts providing forensic accounting services make sure as well that hotlines and reporting channels actually work.
Fear – All potential whistleblowers experience when they are reporting incidents that involve management or when they report to management. An area like legal protection, potential dismissal or fear of trouble can play a part with regards to the individual considering whistleblowing.
Emotional and cultural – A whistleblower is commonly seen as a grass, gossip, sneak, or snitch. With this perception, it can make it incredibly hard to whistleblower even when individuals have seen that doing so will do good for employees, shareholders, stakeholders, and the entire company itself.

If you are currently running a company and you have suspicions regarding fraud or financial crime within the organization, we suggest you talk to a forensic accountant in UAE. You can also try to verify your suspicions yourself by going through the systems of fraud in an organization, which are listed below.

Potential Fraud Symptoms

Overly dominant executives that have unfettered powers or highly leveraged reward systems;
Individuals with habits or lifestyles potentially at variance with remuneration that they receive;
Frequent changes in key personnel such as auditors or anyone in the finance department;
Implausible explanations with regards to surpluses;
Projections which are simply too great to be actually true;
Businesses that are bucking the trend and outperforming their competition significantly;
Frequent changes to accounting policies and policies that are aggressive;
Overly complex corporate structures

Farahat & Co, leading audit firm in Dubai, we combine our auditing, accounting, and investigative skills in looking for as well as uncovering information with financial irregularities, commercial negligence, and/or fraudulent activity. Fraud within an organization is never beneficial. As a matter of fact, it can be dangerous to its growth and success down the road. If you wish to speak with our experts, call us today! We’d love to chat with you regarding your situation.