Forensic Audit Service

Forensic Audit involves a detailed evaluation of records and documents to obtain and extract evidence against the Crime or Fraud that can be used in a court of law or for legal proceedings. Going by the general definition of the term Forensic means application of scientific methods and techniques in the investigation process. Forensic Auditing is very different from Forensic accounting.

Forensic accounting is like a Fraud investigation where the fraud is committed by employees, vendors, customers against the Business. Whereas Forensic Audit is required when there is fraud or crime for the Business. This may involve Shareholders, Owners, Management or Partners themselves indulging in Frauds.

Forensic Audit Services are generally on financial frauds. It requires the utmost expertise and knowledge in the field of accounting & auditing. Forensic Audits are ordered by external parties to gather the evidence. For Eg. Banks may order Forensic Audit on Non- Performing Assets, or for accounts where funds are not utilized by borrowers for the purpose for which they were sanctioned.

Who Initiates a Forensic Audit?

Generally, it is ordered by Stakeholders, Banks, Regulatory Authority, Financial Institutions, Court. A forensic Audit is to confirm and evaluate the fraud with concrete evidence and documents.

Steps while conducting a Forensic Audit

The steps or process involved while conducting a Forensic Audit will be similar to that of a normal Financial Audit with one additional and important step of representation or appearance in the Court of Law or Legal Proceeding. The evidence gathered would need to be presented in the Court of Law. Largely the steps in Forensic Auditing are:

1. Planning the Audit Investigation

- - Detailed and proper planning to attain the objectives of Investigation.
  - Methods and techniques for structuring.
  - The period during which the fraud has occurred to be identified.
  - Quantification of financial loss suffered.
  - Identifying controls & system gaps for the cause of fraud

2. Collecting Evidence

- - Evidence gathered by the investigation team must provide the fraudster identity.
  - Evidence should be arranged in sequential order making it easy for the court to understand
  - It should help in revealing the details of fraud and corresponding financial loss.
  - Evidence should be concrete and should not be altered or modified.
  - Evidence should be preserved and kept safe from any possible damage or attack

3. Reporting

- - Report should clearly mention the investigation scope.
  - Complete details on the identified fraud.
  - Detailed summary of evidence collected.
  - Flow/explanation on how the Fraud was planned and perpetrated
  - Recommendations & suggestions to avoid such frauds

4. Presentation in Court of Law

- - Forensic Auditor must present to Court the evidence collected and provide the explanation on how suspects were identified.
  - To explain complex accounting matters in a simplified approach.
  - Provide all the required support by Court on the investigation done.

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