Forensic: The word forensic comes from the Latin word forensis, meaning “of or before the forum.” It is:-
Relating to, used in, or appropriate for courts of law or for public discussion or argumentation.
Relating to the use of science or technology in the investigation and establishment of facts or evidence in a court of law.
A forensic audit is an examination and evaluation of a firm’s or individual’s financial records. During a forensic audit, an auditor seeks to derive evidence that could potentially be used in court. A forensic audit is used to uncover criminal behavior such as fraud or embezzlement.
AUDIT V/S. FORENSIC ACCOUNTING/FORENSIC AUDIT
A forensic accountant will often look for indications of fraud that are not subject to the scope of a financial statement audit. Forensic Accounting has Investigative mentality” however auditing is done with “professional scepticism”. A forensic accountant will often require more extensive corroboration. A forensic accountant may focus more on seemingly immaterial transactions
It is a specialty in the accounting industry, and most major accounting firms have a department forensic auditing. The auditor may be called in during the process of a forensic audit to serve as an expert witness during trial proceedings. A forensic audit comprises the following steps (in short):-
· Step 1. Planning the Investigation: The forensic auditor and the team will plan their investigation in order to meet their objectives.
· Step 2. Collecting Evidence: The evidence gathered should be sufficient to prove in court the identity of the fraudster(s), reveal the details of the fraud scheme and document the financial loss suffered and the parties affected by the fraud.
· Step 3. Reporting: A forensic audit will need a written report on the crime to be given to the client, so that if they desire, they can continue to file a legal case.
· Step 4. Court Proceedings: During court proceedings, the forensic investigator suspect(s) were found by the team.
A Forensic Auditor is often retained to analyze, interpret, summarize and present complex financial and business-related issues in a manner which is both understandable and properly supported. Forensic Accountants are trained to look beyond the numbers and deal with the business reality of the situation. A Forensic Auditor must initially consider whether his/her firm has the necessary skills and experience to accept the work. Forensic audits are highly specialized, and the work requires detailed knowledge of fraud investigation techniques and the legal framework. Forensic auditor needs to have an understanding on various frauds that can be carried off and how evidence need to be collected. Forensic Auditors can be engaged in public practice or employed by insurance companies, banks, police forces, government agencies and other organizations
Who retains Forensic Auditors?
ü Police Forces;
ü Insurance Companies;
ü Government Regulatory Bodies and Agencies;
ü Courts; and
ü Business Community.
Services rendered by KSC
· Filing requirements & compliance and Regulatory Functions
· Court systems, investigative methodologies & Internal Controls Imple -mentation and Review.
· Evidence Collection and Analysis
· Assignments with regulatory agencies like SEBI, RBI. EOW etc.,
· Provide expertise and literature in this fast growing field
· Communicating with audiences from attorneys & judges to victims & suspects
· Crafting questions to be posed & responding to questions posed
· Identifying documents to be requested and/or subpoenaed
· Identifying individuals to be most knowledgeable of facts
· Conducting research relevant to facts of the case & identifying and preserving key evidence
· Evaluating produced documentation and information for completeness
· Analysing produced records and other information for facts & identifying alternative means to obtain key facts and information
· Providing questions for deposition and cross examination of fact and expert witnesses