Forensic Audit#
Definition#
Forensic audit is an examination of financial information to investigate fraud, embezzlement, or other financial crimes.
Objectives#
- Detect fraud
- Quantify losses
- Gather evidence
- Support legal proceedings
- Prevent future frauds
Scope#
- Misappropriation of assets
- Corruption and bribery
- Financial statement fraud
- Identity theft
- Cyber fraud
Process#
- Planning and scoping
- Evidence gathering
- Analysis
- Reporting
- Testimony (if required)
Techniques#
Data Analytics
- Benford's Law analysis
- Duplicate payment detection
- Trend analysis
- Anomaly detection
Investigation
- Document examination
- Interview techniques
- Surveillance
- Forensic imaging
Red Flags#
- Unexplained journal entries
- Missing documents
- Unusual patterns
- Override of controls
- Related party transactions
Reporting#
- Detailed findings
- Quantification of loss
- Evidence documentation
- Recommendations