What is a Forensic audit?
By definition, Forensic audit refers to the audit or examination of the Company’s/Entity’s financial records in order to obtain sufficient evidence that can be used in a court of law or for legal proceedings. A forensic audit can reveal frauds that may have been committed by the people related to an organization.
There are various kinds of fraud which can be detected in this kind of audit such as:
1. Financial statement fraud which includes intentional forgery of accounting records, omitting transactions – either revenue or expenses, non-disclosure of material details from the financial statements, or not applying the requisite financial reporting standards, etc.
2. Asset misappropriation- the creation of fake documents such as buying asset without any actual receipt and transferring money to the supplier with an intent to get the money in cash
3. Bribery, conflict of interest such as inappropriate approvals, actions that are based on someone’s influence, etc.