Businesses have been flourishing in the UAE for the past many years, thanks to the strong fundamentals of the nation’s economy, attractive return on investments and growing economic signals that have made small to big entrepreneurs expand their businesses. As the businesses grow wider with multiple branches / outlets / business verticals, controls become tougher and give birth to financial leakages, internal frauds and fund misappropriations.
When the cash flow is highly positive and business is on the rise, these leakages go unnoticed. COVID 19 period was the time when many of the businessmen realized bottlenecks in cash flow. The first excuse seen was market outstanding. While, agreeably that is one of the reasons, many instances were noticed that during good times money has been syphoned off by the employees and people managing the businesses including the confidants of the business owners.
You know, seeing a large stream of money flowing makes anyone thirsty.
Listing the most common reasons found through our audits and experiences:
1. Lack of financial controls, No accountants or accounts not maintained,
2. Non availability of software or improper usage of software.
3. Lack of knowledge and involvement in reviewing business and key financial figures.
4. No clarity in customer receivable and supplier payable.
5. Cash transactions – high risk item.
6. Improper method of stock maintenance and management.
7. No audit mechanism.
I am sure the bell is ringing in our ears and we would have realized this during this COVID 19 period.
It’s still not too late. Start taking actions to fix these things. We can help you.
We will be detailing out each reason and methods on how to manage internal frauds and internal financial misappropriation in the coming articles.
Wait for it…..