This is the process of gathering , analysing and reporting on data, in a pre-defined context for the purpose of finding facts and/or evidence in the context of financial /legal disputes /or irregularities and giving preventive advice in this area.
There are two main aspects of forensic investigations:
- Determining the loss
- Reporting the findings
Applications of forensic audits
Fraud investigation-where evidence of fraud is gathered it could be presented in court of law so as to;
1. To prove or disapprove the suspicious
2. To identify persons involved
3. To provide evidence for appropriate action possibly criminal proceedings
Negligence-this covers personal injuries, fatal accidents, medical negligence, professional negligence, fires and other forms of damage caused by negligence. The measure of damage is to put the injured person back in the financial position they would have been but for the negligence Insurance claims-these are claims for such things as business interruption under insurance policies .The loss will be quantified in accordance with the terms of the policy
Others include contract disputes ,copyright and royalty audits, matrimonial and asset tracing Expert witness-these are generally forensic accountants. The require a recognised accountancy qualification .The work of a forensic accountant is subject to scrutiny by both sides and ,if it is wrong ,the court can make cost orders against him.