What is Forensic Audit Report? Highlight its major contents.

Forensic Audit is a dynamic and strategic tool in combating corruption, financial crimes and frauds through investigations and resolving allegations of fraud and embezzlement. It may be conducted to determine negligence. Forensic is the application of science to crime concerns. Forensic science is science which is applied to legal matters especially criminal matters. "Forensic" means suitable for use in the court of law. The examination a company's financial records to derive evidence which can be used in a court of law is a Forensic Audit. It includes the use of accounting, auditing and investigative skills to assist in the legal matters. Forensic audits are highly specialized, and the work requires detailed knowledge of fraud investigation techniques and the legal framework. Forensic accountants are trained to look beyond the numbers and have necessary skills and experience to accept the work. Highly specialized and the work requires detailed knowledge of fraud investigation, techniques and the legal framework (civil, criminal laws and human psychology) and to identify substance over form when dealing with an issue. A forensic auditor is required to have specialist training so that he can understand the legal framework and also has the knowledge of forensic audit techniques. He should also have the expertise in the use of IT tools and techniques that facilitate data recovery and analysis. A forensic audit, also known as forensic accounting, refers to the application of accounting methods for detection and gathering evidence of frauds, embezzlement, or any other such white-collar crime. It is the application of accounting skills to legal questions. Forensic audit is done in two-phases. Investigation Services - At first the auditor begins with an investigation; looking into the accounts and statement) and identifying defects in it. It then moves on to find ways to deal with such defects) which is a reactionary function. Litigation Services - It is entirely possible the frauds detected be resolved within the company itself. However) there are times when they need to be resolved through legal channels. During such situations) forensic auditors give litigation support to the advocates. Their advice and consultation about the legalities of commercial disputes are very essential. Moreover) they also provide research assistance by giving relevant documents and facts to support a legal claim) and also help decide the extent of damage that is required. They are also called up by the Court as an expert witness for further investigation. Illustrative table of contents of a Forensic Audit Report include the following points: Executive Summary Origin of the audit Audit Objective Proposed Audit Outputs Audit Implementation approach Risk Analysis Internal Environment Risk: Customers) product and Competitors; Financial Management; Human Resource Management; Information Technology; Business processes External Environment Risk: Economy and market situation; political and legal scenario; Technology in the sector Audit Process Preliminary understanding of scope and incident coverage Collect evidence Conduct Interviews Analyse findings Validate inferences and conclusions Evidence of risk events Conflicts of interest; Bribery; Extortion; Theft; Fraudulent transactions; inventory frauds; misuse of assets; financial statement frauds Audit recommendations Logical framework approach Preconditions and risks Governance on recommendation implementation Stakeholders Budget considerations