Accounting abuse has become common in the UAE. According to a news report, in the year 2019, a Dubai banker was sent to jail for embezzling Dh 50,000 for his personal needs. Another woman managed to embezzle Dh 375,000 from her workplace in the year 2017. She managed to forge utility bills, payments, and school fees, to take out the large amount.
With organizations accounting processes so vulnerable, it’s no wonder embezzlers manage to get away with different types of accounting abuse initially and are only discovered when it’s too late.
With such critical processes being led in Emirati organizations its essential to have secure accounts too. Opt for the best accounting firms in Dubai and secure your accounts to prevent any further incidents resulting in losses to the company.
Types Of Accounting Abuse And Effects
From trustworthy employees taking out small amounts of cash from the company’s accounts to top managers signing off on receipts and allowing discounts not offered by the company itself, there are numerous ways employees and companies can abuse accounts. Read on to know different types of accounting abuse:
Small businesses are often vulnerable to embezzlement. Embezzlement is when a trustworthy employee manipulates accounting numbers to gain benefit and is involved in stealing funds from the firm. Not only does embezzlement affect the bottom line of companies but it can also contributes to a loss of thousand dollars if it’s undetected. Missing documents, a decline in profits, manipulated check amounts, duplicate payments, all are signs of embezzlement.
Abuse of Power
Sometimes, managers and employees, resort to making decisions on the company’s behalf. For example: An employee may offer special discounts to friends on behalf of the company. By altering accounting records, discounts can be made to look legitimate and official.
Abusing power, not only results in the positive relationships between clients and sellers getting affected in the most negative sense. But it also impacts the employer’s finances negatively.
A company’s managers are usually involved in conducting such activities. Companies that participate in such frauds are often trying to hide serious problems from the public’s eye. Altering the company‘s accounting records and financial statements to appear healthier to investors is one such activity.
Since investors are demotivated and discouraged when they see negative profiles of companies, companies become involved in these seriously damaging activities. The reputation of the business isn’t only ruined, but the company may also go out of business.
Preventing Accounts Abuse
Internal controls within companies are essential in order to prevent such activities. Separation of job duties and fair distribution to prevent one employee form having too much power to mobilize them to manipulate accounting records. These activities can also be discouraged by ensuring documentation and authorization of accounting transactions.
To streamline accounting processes in organizations, it’s essential to hire the best accounting firms in Dubai to help out with regulation of accounting processes and establishing internal controls to prevent any such fraudulent activities that may contribute towards accounting abuse.