Forensic audits are a specialized type of financial assessment that involves examining and evaluating financial records and documents to obtain and present evidence of fraud, corruption, or other illegal activities. Stakeholders, banks, regulatory authorities, courts, or other parties who need to investigate, resolve, or prevent financial disputes or crimes often require forensic financial assessment services.
Regular financial checks are important for any business. A forensic audit in the UAE is particularly critical for detecting fraud and financial manipulation. In simple terms, forensic auditors act as financial detectives who uncover hidden financial issues.
Specialists evaluate financial records to detect misconduct. Their main focus is identifying evidence of financial crimes such as embezzlement or corruption.
Such auditors apply evidence-gathering methods designed to make their findings are legally admissible.
It also involves estimating and substantiating the financial losses caused by fraudulent activity. The auditors also conduct monetary loss assessments to help the businesses to know about the monetary loss.
To pinpoint the existing fraud that is currently going on in your business, we can trace where your money is going, which can even help in preventing future fraudulent acts that could happen when actions are not taken immediately. Our services are not just limited to the above since we ensure that every document for certain events that are taken into account about the movement of money during the alleged crime is checked and assessed to ensure where the money came from, went, and its current place.
We also make certain that you are aware of the damages of the fraud and evaluate exactly how much. And even willing to conduct a business valuation with your request. By letting us work with you and availing our services, we ensure that your organization’s internal controls that can identify potential weak spots where fraudulent acts can enter are efficient enough. We also see to it that fraud won’t transpire in your organization in the first place.
| Forensic Audit | Regular Audit |
|---|---|
| A detailed and specific investigation of financial records and documents to collect and analyze evidence of fraud, corruption, or other illegal activities. | A systematic and independent examination of financial statements, records, or transactions to provide an opinion on their accuracy, completeness, and compliance with accounting standards and regulations. |
| Usually performed by a forensic account examiner who has specialized skills and knowledge in accounting, auditing, law, investigation, and technology. | Usually performed by an external account examiner who follows the auditing standards and procedures established by the relevant professional bodies or authorities. |
| Often initiated by a third party who suspects or has evidence of financial misconduct or crime. May also be ordered by a court or a regulatory authority as part of a legal proceeding or an enforcement action. | Usually requested by the management or the shareholders of the entity being audited. May also be required by law or by the regulators for certain types of entities or transactions. |
| Aims to provide evidence on the nature, extent, and impact of financial fraud or crime. | Aims to assure the overall reliability and fairness of the financial statements or transactions. |
| Focuses on specific areas or issues that are relevant to the investigation or the dispute. | Covers a broad range of financial activities and transactions. |
| Does not have a materiality threshold and investigates every transaction or record that is relevant to the case. | Has a materiality threshold and may not detect or report fraud that is below a certain level of significance. |
| Follows the Generally Accepted Forensic Accounting Principles (GAFAP). | Follows the Generally Accepted Auditing Standards (GAAS). |
| A non-recurring, reactive, and unforeseen event. | A planned event that occurs on an annual basis. |
Forensic audits are typically required when companies in UAE detect irregularities or financial discrepancies.
In cases involving judicial or regulatory proceedings in the UAE, a forensic audit may be required to investigate financial misconduct. Certain warning indicators often trigger the need for such an audit.
So, what are the situations when a Forensic audit is needed in the UAE?
Red flags that indicate that you may need a forensic audit:
Forensic audits are also needed in legal matters:
Forensic audit techniques combine investigative skills with advanced technology. Professionals in Dubai use multiple evidence-gathering methods to ensure accuracy.
The investigation process typically includes:
Advanced detection methods include:
A legally defensible forensic audit report must be objective, concise, and clearly structured. Every report begins with an executive summary audit providing an investigation overview and key findings forensic audit with audit conclusions.
Report structure includes:
Background and scope forensic audit section:
Methodology forensic audit section:
Forensic audits in the UAE must adhere to strict regulatory standards. Maintaining a proper chain of custody ensures that audit evidence is admissible in court
Key compliance areas:
UAE regulations covered include:
A forensic audit has several advantages to businesses in UAE. The first benefit is fraud detection and fraud prevention audit by conducting an in-depth financial misconduct investigation.
Protection against financial crimes:
The legal system allows audit evidence that is admissible in court to support legal proceedings. Certified forensic auditors in UAE provide litigation support and conduct forensic audits for various disputes.
Recovery services include:
Regulatory compliance audits in UAE ensure adherence to financial and anti-fraud laws, helping businesses avoid penalties:
Credentials and Expertise
When selecting a forensic audit partner, look for professionals with recognized certifications such as CPA, CFE (Certified Fraud Examiner), or CRFA (Certified Forensic Accountant).
Local Market Knowledge
Choose firms with a strong understanding of UAE-specific forensic audit requirements, including:
Technology and Methodology
Modern companies increasingly employ data analytics and data mining tools to enhance forensic audits in UAE. Pattern detection, audit and anomaly identification forensic audit can be achieved using financial data analysis tools.
Digital Capabilities include:
Cost Considerations
Understanding the forensic audit fee structure is essential for effective budgeting and cost management. Common pricing models include hourly rates forensic audit, fixed fees audit and blended rate audit arrangements. Request a detailed quotation outlining investigation scope, estimated hours, and total forensic audit cost.
Consider value vs cost forensic audit:
The steps involved in a forensic financial assessment in Dubai are similar to those in other jurisdictions, with some variations depending on the nature and scope of the audit, the applicable laws and standards, and the specific objectives and best practices followed by the forensic account examiner.
Generally, the steps are as follows:
1. Planning the Investigation:
In this step, the forensic auditor defines the objectives, scope, and methodology of the audit, identifies the key risks and issues, and develops a work plan and budget. The forensic account examiner also obtains the necessary documents, data, and information from the client and other sources, and establishes the communication and reporting protocols with the client and other relevant parties.
2. Collecting Evidence:
In this step, the forensic auditor performs various procedures to gather and analyze the evidence, such as interviews, observations, inspections, reconciliations, calculations, tests, and sampling. The forensic account examiner also uses various tools and techniques, such as computer-assisted financial assessment techniques (CAATs), data analytics, digital forensics, and fraud detection software, to identify anomalies, discrepancies, and red flags in financial records and transactions. The forensic auditor documents the evidence and maintains a chain of custody to ensure its reliability and admissibility in court.
Also Read: Internal Audit Services in Dubai
3. Reporting:
In this step, the forensic account examiner prepares a written report to present the findings, conclusions, and recommendations of the audit. The report should be clear, concise, and objective, and should include the following elements: an executive summary, an introduction, a background, a scope and methodology, a detailed analysis of the evidence, a discussion of the issues and implications, and a conclusion and recommendation. The report should also include supporting documents, such as working papers, exhibits, charts, graphs, and tables, as well as the references and sources of the information used in the audit.
4. Court Proceedings:
In this step, the account examiner may be required to testify as an expert witness in court or arbitration or to assist the client or their legal counsel in the preparation and presentation of the case. The forensic auditor should be prepared to explain and defend the audit report, the evidence, and the methodology, and to answer any questions or challenges from the judge, jury, or opposing party. The account examinerr should also be aware of the legal and ethical standards and obligations that apply to their role and conduct in court proceedings.
Forensic audit can provide various benefits to the clients, such as:
Detecting and preventing fraud and crime: This can help clients identify and expose the fraud and crime that may have occurred or may be occurring in their financial activities
or transactions, and to take appropriate actions to stop or prevent further losses or damages.
Resolving and recovering from disputes and crises: This can help clients resolve and recover from the disputes and crises that may have arisen or may arise due to fraud
and crime, and to restore their reputation, trust, and confidence among their stakeholders, customers, and regulators.
Improving and strengthening controls and systems: This can help clients improve and strengthen their internal controls and systems that are designed to prevent or detect fraud and crime, and to enhance their governance, risk management, and compliance functions.
Enquire now
Farahat & Co. is a leading firm in Dubai, UAE that offers forensic audit services to clients who need to investigate and prevent fraud, corruption, and other financial crimes. Farahat & Co. has a team of certified fraud examiners and forensic accountants who have the expertise and experience to conduct forensic audits in various fields and industries.
Farahat & Co. can help you with forensic audit by:
Farahat & Co. is a trusted and reputable firm in Dubai, UAE, which has been providing forensic financial assessment services for more than 35+ years. You can contact Farahat & Co. for an initial consultation.
Disclaimer: The information provided in the article is for general guidance and reference purposes only. It is not intended to be a substitute for professional advice, consultation, or service. The reader of this article should consult with a qualified forensic auditor or a reputable firm in the UAE before initiating or conducting a forensic audit.
Conduct one when fraud is suspected, there is legal controversy, or to seek regulatory compliance assurance
Yes, when certified forensic auditors prepared it after the due evidence had been collected.
Smaller forensic audits may take 3–6 weeks, while complex investigations involving multiple entities can extend over several weeks or months.
Yes, provided that the report is prepared by certified forensic auditors following proper evidence collection and chain-of-custody procedures.
Forensic auditing services serve to save businesses against financial fraud as well as regulate them. Professional forensic auditors bring specialized expertise for fraud investigations, litigation support, and regulatory compliance matters. Select the best experts who are certified with local knowledge and high technology. Quality forensic audit services are a strategic investment that helps prevent fraud, recover assets, and mitigate litigation risks.