A forensic audit is a supplementary examination conducted to gather evidence for an investigation where fraud or irregularities are suspected. It delves deeper than a standard financial audit.
Process:
Forensic auditors skillfully scrutinize specific transactions for signs of deception buried among voluminous records. Document examination and witness interviews reconstruct a verifiable financial timeline.
Objectives:
To determine if financial statements have been intentionally misstated and assess liability for unearthed misconduct involving asset misappropriation schemes, bribery or cybercrimes.
Example:
By piecing together expense receipts, the forensic auditor conclusively linked the disgraced CEO to years of concealed slush funds and self-dealing, finally exposing the full scale of the embezzlement scandal.
Significance:
A forensic audit serves to gather enough compelling evidence of intentional wrongdoing to support legal proceedings against culpable individuals while also restoring reliability to financial reports and repairing damaged reputations.