Forensic Audit

A forensic audit is an audit type that focuses on gathering and analyzing evidence from financial records for legal purposes. Forensic auditors are accountants with specialized skills in investigating financial crimes, including embezzlement, fraud, and money laundering.

Example 1: Embezzlement in a Company

Scenario:
A company notices unexplained withdrawals of ₹50 lakh over a year.

Forensic Audit Process:

1. Review bank statements, accounting records, invoices, and contracts.

2. Trace the source of unauthorized transactions.

3. Identify the employee or executive responsible.

4. Prepare a report with evidence suitable for court.

Outcome:
The company recovers part of the money and files a legal case against the perpetrator.