Business Mantra: Faridabad
Audit is an examination and evaluation of a firm’s or individual’s financial information for detailed analysis whether true and fair business value has been reflected or not. It is conducted to determine negligence or misappropriations by the organisations staff.
- What is forensic auditing?
Forensic auditing refers to gaining expertise within the field of accounting. Forensic auditors often provide expert authentication during experimental chronicles. Most large accounting firms have a forensic auditing department. This audit covers many investigative activities performed by accountants. The process may also include serving as an expert witness in a fraud trial.
A forensic audit could also cover situations that do not involve fraud or misappropriation, such as disputes related to a impoverishment, business terminations, and divorces.
- What are the steps involved in Forensic Auditing?
The steps followed in this Audit are similar to that of statutory audit i.e. Planning the investigation, gathering evidence, Reporting and court proceedings.
During the planning stage, the forensic audit team establishes objectives, such as identifying if any fraud has been committed, how long it has been going on, the parties involved, enumerating the financial loss and providing fraud prevention measures. The team collects evidence in the proper manner in order for it to be used in a court case. There are various techniques used to gather evidence. A report is produced for the client with the findings. Lastly, those involved in the forensic audit may be asked to present their findings to the court which is technically called as the reporting stage.
- Which Types of Frauds are being detected by the Forensic Auditing?
Frauds related to Cash embezzlement, inventory and asset misappropriations, fraudulent payments, Corruption, Bribery, Extortion, Misstatements of financials of company, to determine tax liability.
- Who performs Forensic audits?
It is performed by class of professionals with expert knowledge in both criminology and accounting and with specialization in following a money trail, keeping track of fraudulent and actual balance sheet and checking for imprecisions in overall and detailed reports of income or expenditures. On finding incongruities, it may be the auditor’s job to investigate and determine the reason behind it.
In brief, forensic audit is a special kind of engagement, which requires highly skilled team members who have experience not only of accounting and auditing techniques, but also of relevant legal framework. The investigation is likely to extend to legal proceedings against one or several suspect, and members of the investigation team have to appear in court hearings to justify their findings. Therefore, they must be guided properly in such matters to ensure that their credibility and professionalism cannot be undermined during legal process.