Forensic audit is the kind of financial information investigation services that provide by professional forensic accounting firms which normally required by entity as the result of legal purposes.

Forensic audit normally required to have the number of skill and background that add up to the auditing and accounting skill. In general, forensic audit need both accounting skill and auditing skill. This is because the works they performs are related to investigation on financial reporting.

In order to perform an investigation on financial statements as well as financial information, forensic auditor need to deeply understanding how accounting record are performed as well as accounting treatments from the normal accounting treatment to the complex accounting treatment.

Because fraud over financial reporting normally involved with the critical process as well as critical treatment.

In addition to the accounting and auditing skill, forensic auditor also need to the strong analytical skill which is very importance for performing analytical review on the financial transactions. This is sometime call investigation skill.

Since the report that issued by forensic audit mostly use for court purpose, most of them are normally have background in law. This kind of background help them ease their works.

Forensic audit services normally required the license from local authority to be able to offer the services and sometime the license was obtained along with audit and assurance services. This is the reason why some auditing firm also offer forensic audit.

Forensic Audit Investigation Process:

The process of performing forensic audit is not much different from the process of audit on financial statements. Auditor need to prepare proper planning including before acceptance, investigation plan, substantive investigation procedure, as well as reporting.

Related article  What is a Special Audit? Scope and Why is it require?



Before accepting the engagement, forensic auditing service provider need to ensure that the firm has sufficient resources with high competency. As mention above, auditors need to have three competency skill.

Scope of audit, and purpose of engagement should also clearly check with client. This is to avoid delivery of services below client expectation.

Firm might also need to review the conflict of interest whether providing forensic audit could make the potential conflict of interest or not especially with audit services.

This is because some audit firm also offer the both audit services as well as forensic audit.

If both services are provide, firm need to make sure that guidance is properly use to assess the seriousness of conflict as well as the way to minimize.

Fee is also part of the factor that could potentially effect the independence. Professional fee should be charged based on the work perform.

Planning for investigation:

Once service is assessed and accepted, forensic auditor need to perform investigation. The planning of forensic audit is not much different from planning on audit of financial statements.

At the planning stages, auditor need to identify, assess, and documents certain things. For example, the nature of fraud cases by obtaining the relevance information include people might be involve, the nature of losses, as well as when the case happened and how long. Auditor should also quantify the financial losses that cause by the case.

Since the reports will be used by court, the evidences that obtained and use to support the case must be clears and strong.

Related article  Who is a Group Auditor?