What is the difference between Audit and Forensic Audit ?

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Even, An audit means a formal examination of an organization’s or an individual’s accounts or financial situation. Public accounting firms conduct an audit that provides comfort to an organization’s financial statement. Let us understand the distinction between a forensic audit and an audit.

What is the Qualification of Forensic Auditors?

For becoming a forensic auditor one must opt for the CFAP course. On completion of the course, the person will be  able to do the investigation of forensic audit as a forensic auditor

A number of clients ask what is the main difference between a forensic audit and a normal audit. It applies where there is an investigation of skills involved to examine, analyze and report on the financial information in a manner that is suitable to the court of law. Besides, the internal and external auditor performs the audit, keeping in mind the certain set of standards that are established. Forensic audit services are usually necessary when a dispute has risen.

The number of forensic activities and ambiguous financial activities has been increasing all over the world day by day. Fraudulent activities expose businesses and organizations. Forensic auditing is been now established itself as a dynamic and strategic tool in combating corruption and financial crimes and fraud through the investigation and resolving allegations of fraud and embezzlement that are taking place. The definition of forensic audit keeps on changing in response to the growing needs of corporations. Simply, it means the use of accounting, auditing, and investigative skills to assist in legal matters.

Basics of Audit

However, any organization can examine and evaluate financial statements by doing an audit.  The objective of the audit is that the intended user shall get information regarding the financial statements that are true and fair. Even, audits often fail to detect fraud that is below the materiality level of the auditors who are performing the engagement.  “Generally Accepted Auditing Standards” shall follow while doing the audit.

One of the main differences between both of them is that the audit gives you the guarantee that the financial statements that have been checked are true and fair and are reasonable and a forensic audit helps to analyze and investigate a certain set of transactions if any fraud has occurred. Audits may establish a materiality threshold whereas the forensic audit does not have any limitation regarding the threshold.

What is a Forensic Audit?

A forensic audit is an examination and evaluation of a firm’s or individual’s financial records to derive evidence that can be used in a court of law or legal proceeding. This could be in relation to a trial or some form of mediation. Certified Forensic Accounting Professionals (conduct most of the forensic audits and forensic examinations.

How to determine if you need a forensic audit or a normal audit?

To determine the need for an audit or a forensic audit/examination, consider the following: The organization may need an audit if:

  • Ethical Lapses have occurred
  • Requirement of specialized expertise
  • The organization doesn’t follow the existing policies and procedures.
  • Compliance with laws and regulations is a significant burden
  • Occurrence of IT data breaches

On the other hand, the organization may need a forensic audit if:

  • Suspicious Fraud and theft
  • The entity doesn’t own the accounts which are under your entity’s name.
  • Reconciliation procedures result in timing difference
  • A whistle-blower hotline identified issues such as assets stolen or other defalcations.

Additionally, an auditor plans his work in a way that allows him to focus on gathering sufficient objective, verifiable evidence to support his report.  To obtain the information he needs, an auditor investigates documents and traces documentation.  The auditors confirm certain information such as bank balances or vendor and customer accounts with the appropriate third parties.


However, the forensic auditor and a normal auditor use the same accounting and auditing skills which require special knowledge for conducting different types of engagements that are required to go through as evidence that will give a true and fair view. For that reason, it is necessary to put forth to the clients regarding the difference and understanding of how the audit takes place as well as understanding the client’s needs and providing them with proper advice on the different types of engagement that takes place.

Madhura Phadtare
Madhura Phadtare
Madhura is a Certified Forensic Accounting Professional. She regularly contributes articles on the subjects of frauds, forensic accounting and investigation. She has rick experience of forensic accounting and fraud investigation research.

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