Accounting is like medicine is a broad field offering numerous no of opportunities for specialization. One of the trending specialization is forensic auditing, forensic accounting which is a branch of profession that applies accounting skills to the legal questions. There are different types of fraud involved which might include battling fraud or uncovering failure to comply with the accepted accounting standards, but forensic audit offers a wide range of other services. This forensic audit is conducted by forensic auditor.
Accounting students who wish to become forensic auditors can choose from the limited no. of programs offering that major or conventional accounting degree and then earn certification in the forensic accounting techniques. The forensic accountants must combine a diverse set of skills. He looks after the true and fair view of the financial crimes that have been taking place.
There is no mention of forensic auditor in the Indian statutes so far but there are various provisions related to the forensic auditors in the statutes. Forensic auditors may help the police, and other authorities in collecting evidences and other investigation purposes.
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. It normally requires to have a no. of skills and background that add up to the accounting and auditing skills. Forensic auditor needs both auditing as well as the accounting skills. It goes hand in hand. In order to perform an investigation on financial statements, the forensic auditor needs to deeply understand how accounting records are performed as well as accounting treatments from normal accounting treatment to the complex accounting treatment.
Importance of Forensic Auditor
Forensic Auditors play an important role. There must be a small group of forensic auditors in the organization because they play a crucial role:
- Carry out the vision and mission of forensic audit to prevent, detect and investigate issues of fraud and financial abuse within the organization
- Identify, clearly define, forensic issues and root causes, recommend improved internal controls and business processes, and ensure that corrective action plans are developed.
- To promote a zero tolerance control environment where fraud or any non-compliance is unacceptable.
- Conduct investigation of fraud and abuse
- Oversee the investigation planning and forensic audit report writing process for forensic audits and investigations.
- During the investigation process, provide effective recommendations and solutions to identified issue, ensure business agreement, and follow-through.
Qualification required being a forensic auditor
To become a forensic auditor one must have a basic accounting degree or economics degree and understanding of how business system works. Some specialized certification could be an added advantage. There are some institutes in India from whom you can obtain such certifications, like
Certified Forensic Accounting Professional
Indiaforensic center of studies is the first institute which has launched the course on forensic accounting in India. Indiaforensic provides various certifications on forensic accounting of which one is Certified Forensic Accounting Professional. One can get more information about the above mentioned courses on Indiaforensic Centre of Studies website.
Role and Responsibilities of Forensic Auditor
If there’s a case in the court concerning funds, money, for an evidence to be found, the forensic auditor comes into picture to carry out the investigation process. A forensic audit is an examination carried out on a particular individual’s organization financial statements/ information to act as evidence in the case of fraud. Following is the role of forensic auditor:
The investigation is carried out focusing the suspicion of the client. If a client suspects there might be some fraud going on in the organization. The forensic auditor can investigate on the following points:
- Type of fraud is being carried out
- The time at which the fraud arose
- The steps involved to conceal the fraud
- The impact of fraud on the organization
This is the critical part of the investigation since it is the main reason for the auditing to be carried out. The forensic auditor is expected at the end out of the audit to present full evidence showing the type of fraud that was carried out, the effect of the fraud to the company and also the people involved in the fraud.
The techniques used to gather evidence are as follows:
- Substantive Procedure
This is where the auditor reviews the entire documentation o the company concerning the area of investigation to find out if there are any material statements which are not accurate, the validity of the materials and review on the accuracy of the financial records.
- Analytical Procedure
This helps the auditor to understand the client’s business. He uses this to compare the different periods of time on the expenditure/budget of the company for example.
- Software Programs
The forensic auditors have their own software programs that are able to detect any fraud that might have been carried out using technological devices like computers.
- Internal Controls
The forensic auditor takes time to understand and test the internal control systems to find out if there are any loop holes in the system that would have allowed the fraud to take place.
At the end of the audit, the auditor makes a report regarding the fraud to the client. The report shall include the following:
- Findings of the report
- Information on how the fraud was carried out.
During the court proceeding, the auditor must be present in order to explain how he collected the evidence and also how he identified the suspects. The auditor should explain all the process using simple terms. That being said, it is true that a forensic auditor plays a very big role but he does not work alone. In order to get to hire a forensic auditor, you must decide on which the forensic accounting firm to contact.
Forensic Auditor plays a vital role in all aspects of the society. Regardless the role of forensic auditor in the organization it is likely at the same point the forensic auditor comes in contact with the forensic accounting.