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Brain Storm -Forensic audit vs Regular Audit

Who are The person of interest in any accounting process and why?

Answer 1

Forensic Audit vs. Regular Audit:

The meaning of the audit is examination of the financial statement and states the view that whether it reflects true or fair view or not. So the basic essence of both audit is same. But the importance is realized depending upon the situation. General audit is done to analysis the true picture of the business and it is almost compulsory for all the business and almost all organization conduct the same. But the forensic audit is conducted if there is a doubt of asset theft. The regular auditor is not responsible for the assets theft audit. He just express his opinion for the financial statement and indication of assets theft if any.

The forensic audit is more details analysis of the findings. It requires a special branch of audit expert who are responsible for performing this audit. It requires expertise knowledge in this field. It generally involves two broad categories i.e. Investigative service and Identifying the perpetrator.

Some examples which involves assets theft fraud are under or over valuation assets. Sometime fictitious assets are shown into the assets side of the balance sheet which is not a fair presentation. Sometime assets are inflated by the management for showing the better position of the business. The same is also the misrepresentation of the financial statement and it will make impact on the interest of the investors. So to safeguard the interest of the investors it is also very important to conduct forensic audit if requires.

Financial misrepresentation is the manipulation of the financial statements by the management. The auditor needs to be more focused and should be independent at the time of examine the financial statement. The main objective of both the audit is examine the true and fair presentation of the financial statement. Also the auditors should be more focused and maintain the standards of auditing at the time of performing the audit. If there is any type of indication of fraud then in that case the auditor should take preventive step and should communicate with the management. If the same is rectified by the management then its ok otherwise auditor should incorporate the facts into the audit report. If there is major indication that the frauds are involved in the financial statement and as a result of which the interest of the users of the financial statements are affected then in that case the forensic audit will be conducted.

So at the conclusion it can be said both the audit re important and the basic objective of both the audit is same. The differences are occur at the time of application of the same. General audit is conducted for all the purpose but the forensic audit is conducted when there is a specific indication or requirement. Both the audit should be perform by expert but in case of forensic audit the expertise knowledge involvement is more in the specific field.

References:

Owojori, A. A., & Asaolu, T. O. (2009). The role of forensic accounting in solving the vexed problem of corporate world. European Journal of Scientific Research, 29(2), 183-187.

Schneier, B., & Kelsey, J. (1999). Secure audit logs to support computer forensics. ACM Transactions on Information and System Security (TISSEC), 2(2), 159-176.