Unit IV

Audit of Computerized Systems& Forensic Audit

4.1 Auditing in an EDP Environment

General EDP Control –

EDP Application Control -

Computer Assisted Audit Techniques (Factors and Preparation of CAAT)

General EDP Control:

What is Electronic Data Processing (EDP)?

This is the present day approach for processing statistics. The statistics is processed thru a pc. Data and a hard and fast of commands are given to the pc as input, and the pc robotically tactics the statistics in keeping with the given set of commands. This pc is likewise called a digital statistics processing device. Electronic statistics processing is the quickest and excellent approach available, with the best reliability and accuracy. This approach makes use of a pc, so the generation used is as much as date. The range of employees required is minimal. The method may be finished thru numerous applications and a hard and fast of predefined rules. It is nearly not possible to method huge quantities of statistics with excessive precision, and it's miles the excellent form of statistics processing available. For example, in a automated instructional environment, scholar effects are created thru a pc. At banks, customers' money owed are maintained (or processed), together with thru computers.

EDP ​​is a manner to method, store, retrieve, share, and keep records electronically. There are many approaches to method the statistics. The maximum not unusual place approach of processing statistics is a device gaining knowledge of approach referred to as classification. It may be used to perceive troubles withinside the statistics, locate patterns, and expect outcomes. EDP ​​is a automated statistics processing machine that automates the collection, storage, manipulation, and retrieval of statistics. Text mining entails the method of classifying, expressing, and reading huge quantities of textual content to extract beneficial records. There are many blessings of digital statistics processing. Electronic statistics processing enables lessen improvement and renovation charges for maximum commercial enterprise operations.

Electronic statistics processing has many blessings over different codes  because of its excessive speed, accuracy, reliability, and flexibility. The e-trade industry, banking services, document keeping, transactional statistics processing, and real-time statistics processing businesses all use digital statistics processing. Every statistics processing machine includes 4 fundamental components, together with hardware, software, procedures, and employees.

Electronic facts processing technique

There are many one-of-a-kind strategies and sorts of facts processing, however there are a few very famous strategies with regards to automatic facts processing. These strategies are extensively followed in nearly each industry. EPD structures are extensively used to satisfy the various desires of groups engaged in facts analysis. Depending on the character of your requirements, including facts storage, processing strategies, manipulate principles, laptop equipment, facts analysis, and facts processing, a number of the maximum not unusualplace strategies of digital facts processing are defined below.

1. Share time
2. Real-time processing
3. Online processing
4. Multiprocessing
5. Multitasking
6. Interactive processing
7. Batch processing
8. Distributed processing

Each kind is in brief defined below.

1. Time-sharing: With this technique, many nodes linked to the CPU accessed the principal laptop. The multi-person processing gadget controls the time allocation for every person. Each person can assign a time slice in a chain of principal processing units. The person has to whole the assignment at some point of the allocated time slice. If the person is not able to finish the assignment, the person can whole the assignment at some point of any other assigned time slice.
2. Real-time processing: Providing correct and up to date records is the principle cause of real-time processing. This is viable while the laptop techniques the acquired facts. It will react immediately to what can also additionally happen. Affects upcoming events. Reserving seats on trains and planes is a exceptional instance of real-time processing.

If a seat is reserved, the reservation gadget will replace the reservation file. Real-time processing is a near-on the spot method for purchasing the output of records. This technique saves as much as the most time it takes to get the output.

c.     Online processing: With this processing technique, the facts are processed immediately. Communications hyperlinks assist join your laptop at once to the facts access unit. Data access can also additionally encompass community terminals or on-line enter devices. Online processing is basically used for gaining knowledge of and recording records.

d.    Multiprocessing: Multiprocessing is the processing of more than one duties at the identical laptop that use one-of-a-kind processors on the identical time. It is viable on community servers and mainframes. In this method, the laptop can also additionally encompass more than one unbiased CPUs. This makes facts processing a whole lot faster.

Adjustments can be made on a multiprocessing gadget. In this method, one-of-a-kind processors proportion the identical memory. Processors get records from one-of-a-kind components of a application or one-of-a-kind programs.

e.     Multitasking: This is an essential function of facts processing. Operating one-of-a-kind processors on the identical time is known as multitasking. In this method, one-of-a-kind duties proportion the identical processing resources. The running gadget for multitasking techniques is a time-sharing gadget.

f.       Interactive processing: This technique consists of 3 sorts of features. The sorts of features are as follows

Peak detection

Integration

Quantification

This is a smooth manner to function your laptop. The strategies of this method can war with every different.

g.    Batch processing: Batch processing is a way of processing prepared facts into divided companies. This technique lets in you to divide the processed facts into companies over the desired time period. The batching technique lets in the laptop to carry out one-of-a-kind priorities for interactions. This technique could be very particular and beneficial for processing.

h.    Distributed Processing: This technique is generally used for far off workstations due to the fact the far off pc is hooked up to a big pc. Customers get higher carrier from this method. This method lets in agencies to distribute their geographic laptop usage. ATM is the exceptional instance of this dispensed processing technique. ATM is hooked up to the banking gadget.

Elements of digital facts processing

Electronic facts processing (EDP) is the method of recording records and processing it for financial, legal, or different commercial enterprise purposes. EDP ​​facts are utilized by groups to evaluate overall performance and make boom decisions.

There are many methods to method facts. Data processing is the method of doing something with facts, and there are numerous methods to do it. The advantages of digital facts processing encompass the subsequent features: Ensure dependable facts. Improves the velocity and performance of your organization. Reduce costs. Electronic facts processing may be used to growth productivity, performance, and profitability with the aid of using growing the usefulness of records.

Hardware, software program, tactics and employees are the simple factors. In the hardware section, scanners, information garage gadgets, barcode scanners, coins registers, private computers, scientific gadgets, servers, video and audio system are factors of digital information processing. In the software program section, accounting software program, information access, scheduling software program, analysis, and software program are factors of digital information processing. In the system section, sorting, analysis, reporting, transformation, information collection, and aggregation are the factors of EDP.

In HR, programmers use digital information processing to create additives and spreadsheets. Data access professionals use it to test barcodes. The significance of information processing is now understood in all areas. Today, industries are specializing in what works exceptional for them and the way they reap more profits. EDP ​​structures are as broadly used as control facts structures.

Electronic information processing level

Collection is step one in digital information processing. That is a totally crucial part. In EDP structures, this system guarantees correct information collection. Censuses, pattern surveys, and control through-merchandise are numerous forms of information collection. Preparation is the second one level of digital information processing. Preparations are used to research information processing.

Input is the 0.33 level. Data access is executed the use of a scanner, keyboard and digitizer. The fourth level is processing. There are diverse methods. The very last level is garage. Every pc has a reason for storing files.

What are the blessings of digital information processing?

1. Data control prices are reduced. Helps with selection making and information garage.
2. Processing information reduces office work and is steeply-priced to control files, which facilitates lessen prices.
3. It assists in record control and allows using included procedures and included structures.
4. The capacity to look files saves time. In addition to this, inner and outside collaboration is improved.
5. Well-recognized software program merchandise including Ms. Office use the idea of digital information processing. EDP ​​has the capacity to lessen duplication of work, repetitive input, and selection making.
6. It gives powerful control, complements information safety, manages facts assets, and creates powerful workflows.

Disadvantages of digital information processing

1. Data in digital layout is prone to hacking attempts. As the quantity of cybercrime increases, it turns into crucial and vital to consider information safety and get entry to control. When diverse gadgets in a facts machine are related to a network, defects or loopholes in a single a part of the machine can have an effect on the complete network.
2. You may also want to hold your information in encrypted form. This is particularly crucial whilst processing touchy information and storing it withinside the information center, because the information is despatched over the network.

EDP ​​example: Used through vendors to layout invoices and calculate usage-primarily based totally charges. The faculty makes use of EDP to hold scholar records. In supermarkets it's miles used for recording, however in hospitals it's miles used to screen the development of patients.

In addition, it's miles used to screen lodge reservations, studying establishments and financial institution transactions. Departments including police, cybercrime, and chemistry use digital information processing to report entries. This allows massive corporations to accumulate facts and system information. Electronic information processing also can be used as video and audio system. It may be used as a barcode scanner.

EDP Application Control

Application control testing

At this point, the auditor identifies all of the agency's finance and finance-related application systems, determines which systems are important, gains an understanding and documentation of internal control procedures, and which systems Determine if trusted, which controls will be tested, and meet with the EDP audit section to discuss work coordination.

As a general rule, the auditor intends to rely on the application system, so if you want to reduce the amount of substantive testing of details before giving an opinion on financial statements, the important application controls that need to be tested are: It is as follows. a) Data accuracy, (b) Table maintenance, (c) User access, and (d) Data backup. Other steps, such as processing control, can be added to this list as needed. Control tests can be circulated at the discretion of the auditor.

The audit auditor has the overall responsibility to test the application control of the audit, and the EDP auditor is responsible for providing technical assistance as needed. Application control is either a user procedure or a programmed procedure. User procedures related to application systems such as reconciliation should be tested by the accounting auditor. Programmed procedures, such as editing data accuracy, consist of internal computer processing and external evidence of its effectiveness. The accounting auditor should review external evidence of the effectiveness of the control, and the EDP auditor should provide professional support whenever it is necessary to directly investigate internal computer processing. ..

The application controls that should be considered important if the auditor intends to rely on the application system are:

Data integrity-This is a collection of procedures designed so that the user enters each transaction only once, the transaction completely updates the database, and the output report contains all the appropriate data. Common integrity management procedures include batch totals and adjustments. Testing this control is very similar to the auditing procedure used when auditing the surroundings of a computer. When this control is working effectively, it strongly supports integrity assertions from the time data is entered into the system to the output report.

Data Accuracy-These are controls that ensure that the user enters the most important data elements correctly and the system maintains them correctly. Account numbers and amounts are usually the most important data elements to enter. Controlling the accuracy of account numbers includes table lookups, check digits, and visual validation. Controlling the accuracy of monetary amounts includes batch summing and key regeneration for validation. When these controls are working effectively, they provide strong support for assessment and occurrence assertions.

Table Maintenance-These are controls that ensure that the tables used in financial calculations contain accurate and timely values, such as converting item counts to prices. These tables should only be updated by authorized user department personnel. Once updated, you will need to create and review an audit trail. The table should be independent of computer programs and programmers. When these controls are working effectively, they provide strong support for assessment assertions.

User Access-This control ensures that only authorized persons can record, modify, or delete data, and that the digital signature used to approve the transaction is valid. Testing this control involves ensuring that the security software is functioning properly and that the security rules reflect the intent of the administrator and provide proper segregation of duties. Testing this control is usually a collaborative effort between the financial auditor and the EDP auditor. When this control is working effectively, it provides strong support for presence and occurrence assertions.

Data Backup-This control ensures that your system can be restored in the event of a disaster destroying your primary data files. To be effective, the backup data files should be stored in a safe offsite location and include all important files. The frequency of backups determines how much data you need to re-enter because you need to recapture all the data that was entered between the last backup and the disaster. If this control is not working effectively, all assertions are at risk.

The auditor needs to determine whether the design of the critical application control supports management's financial statement assertions and whether the control is working effectively. In doing this, the auditor must integrate the testing of the application control with other controls in the appropriate audit area.

Computer Assisted Audit Techniques (Factors and Preparation of CAAT)

What is CAAT?

Computer-aided audit techniques (CAAT) are tools used by auditors. This tool makes it easy to search for irregularities in a given data. With the help of this tool, any company's internal accounting department will be able to provide more analysis results. These tools are used in all business environments and are also used in the industry. With the help of computer-aided auditing techniques, you can do more forensic accounting with more analysis. It's a really useful tool to help corporate auditors work in an efficient and productive way.

The CAAT tool supports forensic accounting, which allows you to divert more money into analysis forms, and also prompts where the tool detects fraud. This tool simplifies data in an automated format. The CAAT tool is named for almost every company that has audits or pre-level accounting. The company is fully aware of the benefits of these tools and will make some advances to them as needed, in return for all large raw data in statistical and analytical formats. This is a time saving tool.

As technology advances, many easier-to-use and more efficient CAAT tools are available. Today's business accountants find this tool very easy to use, as new tools come with guidebooks and are even user-friendly.

To use the CAAT tool, it is imperative that the accountant or auditor select the appropriate data, and the selection process is very complex and requires professionalism. After selecting the appropriate data, import it into the CAAT tool and the tool will automatically generate the analysis data. This tool really contributes to the efficiency of the auditor.

Factors to be considered in use of CAAT’s

When making plans an audit, the auditor might also additionally recall an appropriate aggregate of guide and laptop-aided audit strategies while determining whether or not to apply CAAT.

Factors to recall on this regard:

1. Unrealistic guide testing:

a) Some audit techniques won't be capable of be carried out manually, both due to the fact they rely upon laptop processing (including superior statistical analysis) or due to the fact they contain an amazing quantity of information.

b) In addition, many CIS packages carry out obligations for which tough reproduction proof isn't to be had, making it impractical for auditors to carry out exams manually. Lack of proof of tough reproduction can arise at numerous levels of the enterprise cycle. (Interest calculation isn't printed.)

(No analysis / volume / hardcopy)

2. CAATS and suitable laptop gadget / information availability:

a) Auditors need to recall CAAT availability, suitable laptop gadget, and required laptop-primarily based totally facts structures and information.

b) The auditor might also additionally plan to apply different laptop gadget if using CAAT at the entity laptop is uneconomical or infeasible. (Example: Due to incompatibilities among the auditor's package deal software and the entity machine)

c) In addition, auditors can pick to apply new proprietary gadget including PCs and laptops.

d) The entity to offer a processing facility at a handy time to help with sports including loading and going for walks CAAT at the entity's machine and to offer a replica of the information documents withinside the layout required through the auditor. The cooperation of the character in rate is required. ..

(Compatibility / Practical / Economical / Facility and time cooperation)

3. Audit Team IT Knowledge, Experience, and Experience: The audit crew have to have enough information to plan, execute, and use the particular CAAT assets employed. The stage of information required relies upon at the availability of CAAT and an appropriate laptop gadget.

4. Effectiveness and performance:

The effectiveness and performance of audit techniques may be advanced through the use of CAAT to achieve and examine audit proof. Efficiency troubles that the auditor might also additionally recall include:

a) Time to plan, layout, execute and examine CAAT,

b) Technical evaluation and assist time,

c) Form layout and printing (confirmation, etc.), and

d) Computer aid availability.

5. Time constraints:

a) Certain information, including transaction details, is regularly retained for a quick time period and won't be to be had in machine-readable layout till the auditor desires. Therefore, the auditor has to set up for the illustration of the specified information. Alternatively, you could want to alternate the timing of obligations that require such information.

b) Auditors can plan to apply CAAT if the time to be had for implementation is limited.

Its use is to higher meet the auditor's time necessities than different viable techniques.

Procedure of CAAT

CAAT application procedure:

The main steps a cost auditor takes when applying CAAT when performing a cost audit in an EDP environment are as follows:

(A) Set the purpose of the CAAT application.

(B) Determine the content and accessibility of the entity's file.

(C) Define the transaction type to test.

(D) Define the procedure to be performed on the data.

(E) Definition of output requirements.

(F) Identify audit and computer personnel who may participate in the design and application of CAAT.

(G) Refine cost and benefits estimates.

(H) Make sure that your use of CAAT is properly managed and documented.

(I) Arrange management activities, including necessary skills and computer equipment.

(J) Execution of the CAAT application.

(K) Evaluation of results.

Key takeaways:

1. This is the present day approach for processing statistics. The statistics is processed thru a pc. Data and a hard and fast of commands are given to the pc as input, and the pc robotically tactics the statistics in keeping with the given set of commands.
2. EDP ​​is a manner to method, store, retrieve, share, and keep records electronically.
3. Electronic statistics processing has many blessings over different codes because of its excessive speed, accuracy, reliability, and flexibility.
4. There are many one-of-a-kind strategies and sorts of facts processing, however there are a few very famous strategies with regards to automatic facts processing.
5. Providing correct and up to date records is the principle cause of real-time processing.
6. Multiprocessing is the processing of more than one duties at the identical laptop that use one-of-a-kind processors on the identical time.
7. Batch processing is a way of processing prepared facts into divided companies.
8. Electronic facts processing (EDP) is the method of recording records and processing it for financial, legal, or different commercial enterprise purposes.
9. There are many methods to method facts.
10. Collection is step one in digital information processing
11. Data in digital layout is prone to hacking attempts.
12. EDP ​​example: Used through vendors to layout invoices and calculate usage-primarily based totally charges
13. The audit auditor has the overall responsibility to test the application control of the audit, and the EDP auditor is responsible for providing technical assistance as needed.
14. These are controls that ensure that the tables used in financial calculations contain accurate and timely values, such as converting item counts to prices.
15. The auditor needs to determine whether the design of the critical application control supports management's financial statement assertions and whether the control is working effectively.
16. Computer-aided audit techniques (CAAT) are tools used by auditors.
17. CAAT tool supports forensic accounting, which allows you to divert more money into analysis forms, and also prompts where the tool detects fraud
18. When making plans an audit, the auditor might also additionally recall an appropriate aggregate of guide and laptop-aided audit strategies while determining whether or not to apply CAAT.
19. The audit crew have to have enough information to plan, execute, and use the particular CAAT assets employed.
20. The effectiveness and performance of audit techniques may be advanced through the use of CAAT to achieve and examine audit proof.

4.2 Forensic Audit - Definition, Importance of Forensic Auditor, Services Render by Forensic Auditor, Process of Forensic Auditing and Forensic Audit Techniques and Forensic Audit Report

Definition:

What is the meaning of forensic auditing?

Forensic auditing is the analysis and review of a company's or individuals financial records to extract facts and can be used in court. Forensic auditing is a specialty of the accounting industry, and most major accounting firms have departmental forensic auditing. Forensic auditing includes experience in accounting and auditing operations and expertise in the legal framework of forensic auditing.

Forensic audits cover a wide range of research activities. Court audits may be conducted to prosecute parties for fraud, embezzlement, or other financial crimes. The auditor can be summoned during the court audit and act as an expert witness during the court proceedings. Forensic audits may also include situations without financial fraud, such as bankruptcy filing disputes, business closures, and divorces.

A court audit examines and evaluates a company's or individuals financial records to provide evidence for use in court or legal proceedings. Forensic auditing is a specialty of accounting, and most large accounting firms have a forensic auditing department. Forensic audits require expertise in accounting and audit procedures and the legal framework for such audits.

Forensic audits cover a wide range of research activities. Court audits are often conducted to prosecute parties for fraud, embezzlement, or other financial crimes. In the course of a court audit, the auditor may be called to act as an expert witness during the court proceedings. Forensic audits may also include situations that do not include financial fraud, such as bankruptcy filings, business closures, and divorce-related disputes.

Importance of Forensic Auditor

Roles and responsibilities of the court auditor

In the event of a financial / financial case in court, a court auditor will be called in to conduct an investigation to find evidence.

Now, from now on, you may now have a clue as to what a court audit is. Fortunately for you, you don't have to strain your brain here. That is the meaning.

Forensic audit / forensic accounting is an inspection performed on the financial statements / information of a particular individual or organization to serve as evidence of a fraud case.

The roles of the forensic auditor are as follows:

1-Survey

The investigation will focus on the suspicion of the client. A client suspects that some fraud has occurred in his company, for example with respect to the materials provided. The forensic auditor confirms that:

1. What kind of scam is being done (if any)?
2. Time when fraud is happening
3. How the scam was hidden and the people involved in it
4. Impact of fraud on the company

2-Evidence

This is an important part of the investigation as it is the main reason for audits to take place. At the end of the audit, the court auditor is expected to provide complete evidence of the type of fraud performed, the impact of the fraud, and the people involved in the fraud.

The techniques used to collect evidence are:

1. Substantial procedure

This is where auditors review the entire company's documentation on the area of ​​research to see if there are any important statements that are not accurate, the validity of the material, and the accuracy of financial records.

b.    Analytical procedure

This helps auditors understand the client's business and the changes in the business. He uses this to compare different periods of company spending / budget, for example.

c.     Software program

Forensic auditors have their own software programs that can detect fraud that may have been performed using technical devices such as computers.

d.    Internal control

Forensic auditors take time to understand and test all internal control systems to see if there are holes in the system that could lead to fraud.

e.     Interview

The court auditor interviews the suspect and seeks additional information about the fraud.

3-Report

At the end of the audit, the auditor reports fraud to the client.

The report should include:

1. Report findings
2. Summary of evidence
3. Information about how the scam was done
4. Recommendations on how to avoid fraud in the future

The report is used as evidence in court if the client decides to file a proceeding.

4-Court

During court proceedings, the auditor must be present to explain how the evidence was collected and how the suspect was identified.

The auditor should use simple terms to describe the entire process (for those who do not understand accounting terms).

That said, it's true that the court auditor plays a huge role, but he's not working alone. To hire a forensic auditor, you need to decide which forensic accounting firm to contact.

Services Render by Forensic Auditor

1. Craft questions raised
2. Answers to the questions raised
3. Identifying requested and / or summoned documents
4. Identify the person who is most familiar with the facts
5. Conducting investigations related to the facts of the case
6. Identifying and storing important evidence
7. Evaluate the completeness of the documents and information created
8. Analyze the records and other information created to confirm the facts
9. Identify alternatives to obtain important facts and information
10. Providing questions for factual and expert witness testimony and cross-examination

Process of Forensic Auditing and Forensic Audit Techniques and Forensic Audit Report

Process of Forensic Auditing

Forensic audit procedures are not very different from audit procedures. It also performs important steps to obtain evidence, such as analytical reviews, inquiries, observations, recalculations, and inspections.

But, as I mentioned in my last post, what is forensic accounting? Evidence collected from forensic accounting or audits is typically used for legal purposes rather than for the general purpose of auditing financial statements. This is because the requirements for conducting a court audit are different from requiring a financial statement audit, such as a statutory or non-statutory audit.

Therefore, the procedure for obtaining these evidences is more concrete and factual, not hypothetical.

The following are important steps commonly used to perform forensic audits.

1) Inquiries:

Forensic audit procedures require evidence to be obtained. The court auditor may temporarily request a vacant seat from the officer or employee under investigation. This allows the auditor to inquire about the employees involved in the relevant transaction and to obtain more detailed information about the case.

This procedure also has its own purpose. This allows the auditor to get information from other relevant personnel and allows the auditor to observe what went wrong. For example, the officer under investigation is on vacation. Then his daily work is done by someone else.

During this time, the forensic auditor can notify you if fraud or improper things may have occurred. However, this procedure requires a company from the company's top management. Or those who have the right to force or encourage the subject to take a vacation.

Otherwise, those subjects will not take a vacation because they may know that other people taking over the job are temporarily aware of the mistakes they have made.

However, this investigation provides information to better understand that improper things may have happened so that the court auditor can take additional steps to collect the facts. Evidence from the investigation may not be the solid evidence on which the conclusions are based.

2) Analysis procedure:

In the analysis procedure, the forensic auditor should always take great care to ensure that the data used in the analysis is accurate before performing an analysis review.

Otherwise, the results of the analytical review cannot be used as evidence and may lead to incorrect conclusions. However, you may not be able to collect data using analytic reviews because the results of analytic reviews are based on the best predictions and estimates.

The most important aspect of this procedure is that the auditor can see trends and fluctuations in a particular transaction (such as sales and expenses) so that the auditor can take detailed steps to see or capture the deviations.

For example, if there is concern about payroll-related fraud, the auditor will perform an analytical review of payroll costs during the period by incorporating staff numbers, outputs, attendant lists, and other data as follows: increase. Check if it is consistent. If it doesn't flow consistently, you need to perform a detailed review.

3) Recalculation and inspection:

Examining data and records is the most common procedure for collecting evidence about the work of a court accountant.

It simply means collecting a sample of the original invoice, receipt, and other important documents. Next, figure out how much loss you should have, or what items are included in this procedure.

Performing this procedure should reflect the results of the analytical reviews and investigations that the auditor has already performed above. For example, a detailed review of salary costs for a month or period that does not match other data or records.

4) Observation:

You must understand and perform a particular procurement or feature before you can run a specific test for the cause. They need to make real observations. This is an important part that forensic auditors should not avoid. Otherwise, other steps such as inspection will not run smoothly or naturally.

Another important thing is that procurement, such as payroll accountants, including payroll calculations, may require specific information from specific parties.

In addition, forensic auditors may inquire of top-level or outside parties from low-level staff, such as banks, suppliers, and investors, as needed.

5) Conclusion:

In summary, forensic accounting or auditing procedures are similar to auditing procedures, but need to be clearly more specific and realistic. It also includes planning, detailed testing, and conclusions, but the conclusions need to be more specific, such as the degree of fraud and loss.

Forensic Audit Techniques

1. Public file evaluate and historical past check

▪ Public database

• Increase within side the wide variety of companies

• Data reliability

• What form of facts is available?

▪ Regulatory website

• May range with the aid of using enterprise and operational status

• Real property records. Business registration

▪ Company record

• Stock switch record. Accounting facts; Vendors; Competitors; Customers

▪ Internet

• Search engine

• News source / newspaper

• Phone wide variety and address

•map

• Legal resources

• Government site

2.     Interview with a informed person

▪ Interviews and interrogations

▪ Continuous procedure for the duration of the survey

▪ Get extra data for every interview

▪ Evidence from witnesses gives extra leads

▪ May discover extra witnesses

▪ Interview the goal handiest after finishing an interview with close by witnesses

3.     Confidential sources

▪ Hotline

▪ Email

▪ Letter

▪ Current worker

▪ Former worker

▪ Vendors and former companies

▪ Customers and former customers

4.     Analysis of bodily and digital evidence

▪ Evidence protection / verification

▪ CoC

▪ Modified fictitious file

▪ Physical examination

▪ Counterfeit

▪ Document dating

5.     Analysis of economic transactions

▪ Horizontal / vertical analysis

▪ Approval of latest companies and employees

▪ Comparison of worker and dealer addresses

▪ Analysis of income returns and reserve accounts

▪ Control override

▪ Various evaluations primarily based totally on recognized enterprise fraud schemes

Forensic Audit Report

What is a Forensic Audit Report?

A forensic audit is an inspection or inspection of a company's or organization's financial records to collect information in legal proceedings. Forensic audits are a branch of accounting, so these auditors and investigators are not the ones who go to the crime scenes seen in the movies. Forensic accountants or auditors are responsible for a wide range of investigative activities, including bankruptcy and divorce disputes. The majority of large companies have forensic audit departments. You can also see sample and templates for daily audit reports and HR audit report templates.

How to perform a forensic audit?

When conducting a forensic audit, the forensic auditor follows certain steps or procedures, just like any other type of audit. They can be professionally trained and trained professionally and appropriately. Apart from standard audit procedures, companies should perform forensic audits that include the following steps:

1. Organize:

When hiring an expert to organize and create a sample forensic report as a client, he must first conduct a forensic investigation and be able to determine where the focus of the audit is. This is because the client or business associate may suspect that certain misconduct has been committed under his supervision. It can be in the form of the quality of the goods purchased or the materials produced, which does not justify the money. You can also check the sample safety report template.

2.     List all evidence

By the end of the audit process, forensic auditors need to understand and identify the types of fraud and perpetrators committed on the company premises. In addition, the evidence collected proves the identities of the parties, admits them to court, discloses the details of the entire scheme, and records the amount of financial loss resulting and everyone affected by the crime. Environmental audit report templates are also available.

3. Report

Plans, suggestions, or strategies to properly present fraud to clients, reveal findings and findings, summarize collected data, and improve activities, guilty, and internal control fraud that lead to real fraud. You probably need a report to explain. You also need to make the report available to your customers, as they need to do a lot to take legal action. A sample financial report template is also displayed.

4. Proceedings

If a client or company files a lawsuit, a forensic expert must be present in court to interpret and explain the evidence collected and how the suspicious party was found. They also need to explain accounting issues in simple, easy-to-understand terms to benefit those who are not familiar with accounting terms but need to understand fraud.

Key takeaways:

1. Forensic auditing is the analysis and review of a company's or individuals financial records to extract facts and can be used in court.
2. Forensic audits cover a wide range of research activities.
3. A court audit examines and evaluates a company's or individuals financial records to provide evidence for use in court or legal proceedings.
4. In the event of a financial / financial case in court, a court auditor will be called in to conduct an investigation to find evidence.
5. The investigation will focus on the suspicion of the client. A client suspects that some fraud has occurred in his company, for example with respect to the materials provided.
6. Forensic auditors have their own software programs that can detect fraud that may have been performed using technical devices such as computers.
7. The court auditor interviews the suspect and seeks additional information about the fraud.
8. During court proceedings, the auditor must be present to explain how the evidence was collected and how the suspect was identified.
9. Forensic audit procedures are not very different from audit procedures. It also performs important steps to obtain evidence, such as analytical reviews, inquiries, observations, recalculations, and inspections.
10. Forensic audit procedures require evidence to be obtained.
11. In the analysis procedure, the forensic auditor should always take great care to ensure that the data used in the analysis is accurate before performing an analysis review.
12. Examining data and records is the most common procedure for collecting evidence about the work of a court accountant.
13. Another important thing is that procurement, such as payroll accountants,
14. Including payroll calculations, may require specific information from specific parties.
15. A forensic audit is an inspection or inspection of a company's or organization's financial records to collect information in legal proceedings.
16. When conducting a forensic audit, the forensic auditor follows certain steps or procedures, just like any other type of audit.
17. When hiring an expert to organize and create a sample forensic report as a client, he must first conduct a forensic investigation and be able to determine where the focus of the audit is.
18. Plans, suggestions, or strategies to properly present fraud to clients, reveal findings and findings, summarize collected data, and improve activities, guilty, and internal control fraud that lead to real fraud.

Reference:

1. Fundamentals of Accounting and Auditing The Institute of Company Secretaries of India
2. Auditing assurance standards The Institute of Chartered Accountants of India