Recently, BG Ltd., an existing Indian Company, was taken over by a new set of shareholders, who acquired majority stake in the company. They have taken steps to change Mr. E, the existing auditor, following the procedure

Probe into suspected fraud The fraud is suspected in the area of purchase of building materials for company construction project, say factory building. The Forensic Auditor will look into the following areas: Collect complete details about the factory which has been constructed including type of construction, area, furnishing, lighting, etc.; Scrutinise quotations received from engineers. In case of labour contract only, there is need for further probe, since it is the company which has to procure the materials/services. Make out a list of parties from whom goods have been purchased and services have been procured. Where such purchases are from related parties, the same requires disclosure under the Companies Act. Form 3CD may be checked to see whether there is any transaction between the company and persons specified in section 40A(2) of the Income-tax Act, 1961. The help of a registered valuer may be obtained to ascertain, the approximate cost of construction for the factory may be thus obtained and the same can be compared with the amount debited in the books of the company. Significant difference would clearly indicate that a fraud has taken place in this area.