Forensic Accounting Procedures are not too much different from audit procedures. Those procedures include analytical reviews, inquiries, observations, recalculations, and inspection etc.
However, as said in our previous post, What is forensic accounting?, the evident gather from Forensic Accounting normally use for legal purpose.
Therefore, the procedure to obtain those evident is more specific and fact rather than assumption.
It is the importance of Forensic Accounting Procedures. Sometimes a Forensic Accountant requires the officers or personnel who being investigated to be vacant temporary.
This procedure has its own purpose. For example, one the officer investigating is on leave, then his daily job is done by someone else.
During this time, Forensic accountant could be able to notify if there any opportunity that the fraud could have happened. Yet, this procedure does require the corporation from the top management of the company.
For analytical procedure, Forensic Accountant should always pay very strong caution which to make sure that the data they use for analysis is accurate.
However, sometime the analytical review may not be used to gather data since the result from analytical review is based on the best projection and estimate.
Recalculations, and Inspection:
Inspection of data and records is the most popular procedure to be used in gathering evidence regarding Forensic Accountant’s job.
It just simply means collecting the sample of original invoices, receipts, and other important documents. Then, figure out how much the lost should be or figure out the amount of which item, in this procedure.
Before performing some specific testing, of the cause, it is required to understand some specific procure or function and to do so they need to perform actual observations. It is a very important part of FA accountant’s job or FA auditor’s jobs.
Other important things are, they might need some specific information from the person who involves in specific procure like payroll account the one who involve with calculating salary.
Moreover, Forensic Accountant might inquire information from the low level of staff to the top level or from external party if required like banks, suppliers or investors.
In summary, the Forensic Accounting Procedures is similar to audit procedure, but the evident need to be more specific and realistic.
It also involves planning, detail testing, and conclusion, but the conclusion needs to be more specific like how much the fraud or loss.
Of cause, the Forensic Accounting also need to issue the report, but this report going to be used legal purpose or dispute resolutions. This report is different from the audit report.