Who Initiates a Forensic Audit?

Generally, it is ordered by Stakeholders, Banks, Regulatory Authority, Financial Institutions, Court. 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 will include:

Planning the Audit Investigation

• Detailed and proper planning is must to attain the objectives of Investigation
• Methods and techniques to be used to be structured
• 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

Collecting Evidence

• Evidence gathered by the investigation team must provide the identity of the fraudster
• 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

Reporting

• The report should clearly mention the scope of the investigation
• Complete details on identified fraud
• A detailed summary of evidence collected
• Flow or explanation on how the Fraud was planned and perpetrated
• Recommendations & suggestions on how to avoid such frauds

Presentation in Court of Law

• It will be the duty of the Forensic Auditor to present to Court the evidence collected and provide an 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