How Can a Partner Detect That Company Money Is Being Used Outside the Company’s Interest?

A partner detects misuse of company funds by reconciling bank movements to the ledger, reviewing the managing partner's current account, testing expenses unrelated to the business, and examining transactions with connected companies. The Commercial Companies Law grants partners a right of access to the books. Abdelhamid & Co (MOE LC0106-01, FTA TAN 30003958) performs this review for partners.

Where a partner starts when checking for misuse of company funds

Start with the bank statement. It is issued by an external party that management does not control, which makes it the most reliable starting point. Compare every payment in the month against the supporting document recorded in the books.

Federal Decree-Law No. 32 of 2021 on Commercial Companies requires a manager to run the company in its interest and prohibits using the position for personal benefit. The law imposes liability on the manager for loss caused to the company or the partners by breach of that duty.

The sections below set out nine practical forms of money leaving the company's interest, with the procedure that detects each.

Personal drawings by the managing partner

The managing partner draws on company funds by virtue of his executive role. The distinction between a legitimate and an improper drawing rests on how it is recorded and documented.

Request the current account statement for every partner and test for:

• A debit balance on the managing partner exceeding his share of retained earnings.
• Cash withdrawals without a payment voucher signed by an authorised signatory.
• Drawings not matched by proportionate drawings for the other partners.
• Omission of the partner current account statement from the annual reporting pack.

Expenses unrelated to the business

Federal Decree-Law No. 47 of 2022 on Corporate Tax allows a deduction only for expenditure incurred wholly and exclusively for the business. A personal cost charged to the company produces two effects: it reduces the other partners' share, and it creates an assessable difference with the Federal Tax Authority.

These forms recur in UAE companies:

• Housing rent for the managing partner and his family charged to rent expense.
• Children's school fees included in general and administrative costs.
• Car instalments registered to the company for vehicles used by family members.
• Travel and accommodation for trips with no documented meeting or contract.
• Entertainment costs with no record of who was hosted or why.

Connected companies and related party purchases

IAS 24 defines related parties and requires disclosure of transactions with them. The Corporate Tax Law requires those transactions to be priced at arm's length.

Test the following:

• Goods or services bought from a company owned by the managing partner above market price.
• Goods sold to a sister company below cost or below the price charged to other customers.
• Rent on property owned by the managing partner above comparable market rent.
• Costs of a sister company charged to the company with no cost-sharing agreement.
• New suppliers with large volumes and no quotation comparison on file.

Compare the prices applied against independent suppliers of the same goods or service in the same period.

Unjustified salaries and bonuses

Reconcile payroll to the Wage Protection System and to residence visa and work permit records. This procedure exposes three common patterns:

• Employees on the payroll with no actual presence at work.
• Relatives of the managing partner paid above the market rate for the same role.
• Year-end bonuses the manager approves for himself without a partners' resolution.

Request the approval document for every bonus above a set threshold and match the approval date against the payment date.

Undocumented transfers and duplicate invoices

Test outgoing bank transfers and match each one to a supplier invoice or contract. Transfers to individual accounts, or to accounts outside the UAE with no contract, carry the highest risk.

Duplicate invoices are found by testing payments for these patterns:

• The same invoice number paid more than once at identical amounts.
• Two invoices for the same amount from the same supplier days apart.
• A supplier whose bank account number changed during the year.
• A supplier sharing a phone number or address with a company employee.

Run these tests on the complete general ledger using computer-assisted audit techniques, because manual sampling misses small recurring patterns.

Partner loans and personal use of company assets

A loan to a partner appears in the balance sheet within receivables or the partner current account. Test its terms: whether it carries interest, whether it has a repayment schedule, and whether the partners approved it.

An interest-free loan with no maturity is an effective transfer of profit to one partner. The Corporate Tax Law treats it as a related party transaction requiring arm's length pricing.

Personal use of company assets covers vehicles, property, equipment and labour. Identify these by reconciling the fixed asset register to a physical count and establishing the location and user of each asset.

Key facts on detecting misuse of company funds

Our methodology for investigating misuse of company funds

We perform five steps when engaged by one or more partners:

• Step 1: Document the access request in writing, fix the period under review, and obtain access to the accounting system.
• Step 2: Reconcile bank movements to the ledger in full and schedule every payment without a supporting document.
• Step 3: Run anomaly tests across the complete general ledger: duplicate invoices, round sums and payments to individual accounts.
• Step 4: Review partner current accounts and related party transactions and benchmark prices against the market.
• Step 5: Issue a report setting out each event, its documentary evidence, its estimated financial effect, and its potential tax consequence.

Common mistakes partners make when following up

• Confronting management verbally before gathering documents, which allows balances to be adjusted before the review starts.
• Relying on annual financial statements alone, which present aggregated balances rather than individual transactions.
• Requesting access verbally, which leaves no proof of the request date or subject if court action follows.
• Asking the internal accountant to investigate, when that accountant reports to the same executive management.
• Delaying the review for years, after which documents are missing and banks struggle to reproduce old statements.

Why choose Abdelhamid & Co

• Licensed by the Ministry of Economy under registration LC0106-01 and entered in the Local Auditors Record under No. 956.
• Registered FTA Tax Agent (TAN 30003958, TAAN 20033908).
• Experience preparing expert reports for UAE courts and judicial expert committees.
• Anomaly testing across the complete ledger using computer-assisted audit techniques, not samples alone.
• Reports delivered in Arabic or English according to the body that will use them.

Frequently Asked Questions

Related Services

• Forensic Audit — Fraud & Commercial Disputes — expert reports usable in litigation.
• Data Analytics Using CAATs — anomaly detection across the complete ledger.
• External Audit Service — independent opinion on annual financial statements.
• Voluntary Disclosure — correcting tax returns after findings emerge.
• Insights — more guidance on audit and financial disputes.

Contact Us

To request an independent review of your company's cash movements, call Abdelhamid & Co in Sharjah on 00971065610040 or visit our contact page.

Last reviewed: 30 July 2026