Importance of Forensic Audit in today’s era

Introduction:

Forensic Audit means an audit in the area of finance which calls for specified skills to detect financial accuracy of any data and to derive evidences which can be used in a Court of law or in any legal proceedings. It includes investigation, examination, calculation of data, creation of evidence in such a manner that it can stand as evidence before any court of law.

Objectives of Forensic Auditing:

a) To use the Auditor’s conclusions to facilitate a settlement or claim, or jury award by reducing the financial component as an area of continuing debate.

b) To avoid fraud and theft.

c) To restore the public confidence.

d) To enhance and improve the Corporate Governance policy.

Greater importance of Forensic Audit:

Forensic Audit is assuming greater importance in India and also globally in the wake of numerous financial frauds, unethical business practices and high incidence of cybercrime. In almost every sector and in verticals, there has been some financial frauds and white-collar crimes, which has paved the way for introducing and adopting the Forensic Audit.

Conclusion:

A forensic auditor requires expertise not only in accounting and auditing procedures but also expert knowledge regarding the legal framework. A forensic auditor should have specialized knowledge to have an understanding of various frauds that can be carried out and of how evidence needs to be collected. There are different types of fraud that a forensic auditor is expected to investigate. The investigation is likely to lead legal proceedings against one or several suspects, and members of the investigative team must be comfortable with appearing in court to explain how the investigation was conducted, and how the evidence has been gathered.

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