Forensic auditors investigate financial fraud and other legal issues by applying accounting skills and knowledge. They are often hired by law enforcement, banks, insurance companies, and businesses to detect fraud, prevent fraud, provide expert testimony in court, and review internal controls. Forensic auditors must have strong analytical abilities, be detail-oriented, inquisitive, and able to gather and analyze financial evidence. Their work involves activities like tracing missing funds, reviewing documents for legal cases, and assisting with prosecuting financial crimes.

1. Forensic Accounting: Scope
By
Prof.W.Infant Emiliya
Assistant Professor, SRCAS.

2. Forensic Accounting: Scope
Forensic Auditors can be engaged in public practice or employed by insurance companies, banks,
police forces, government agencies and other organizations.
A Forensic Auditor is often involved in the following:
• Fraud Detection: Investigating and analyzing financial evidence, detecting financial
frauds and tracing misappropriated funds
• Computer Forensics: Developing computerized applications to assist in the recovery,
analysis and presentation of financial evidence;
• Fraud Prevention: Either reviewing internal controls to verify their adequacy or
providing consultation in the development and implementation of an internal control
framework aligned to an organization’s risk profile
• Providing Expert Testimony: Assisting in legal proceedings, including testifying in
court as an expert witness and preparing visual aids to support trial evidence.

3. Fraud Detection
• Review of the factual situation and provision of suggestions regarding possible courses
of action.
• Assistance with the protection of assets and preventing recurrence.
• Co-ordination of other experts, including:
o Private investigators;
o Forensic document examiners;
o Consulting engineers.
• Assistance with the recovery of assets by way of tracing misappropriated funds and subsequent
civil action or criminal prosecution.

4. Litigation Support
• Assistance in obtaining documentation necessary to support or refute a claim.
• Review of the relevant documentation to form an initial assessment of the case and
identify areas of loss.
• Assistance with Examination for Discovery including the formulation of questions to be
asked regarding the financial evidence.
• Attendance at the Examination for Discovery to review the testimony, assist with
understanding the financial issues and to formulate additional questions to be asked.
• Review of the opposing expert's damages report and reporting on both the strengths
and weaknesses of the positions taken.
• Assistance with settlement discussions and negotiations.
• Attendance at trial to hear the testimony of the opposing expert and to provide
assistance with cross-examination.

5. Forensic Auditors are retained by:
• Lawyers
• Police Forces
• Insurance Companies
• Government Regulatory Bodies and Agencies
• Banks
• Courts and
• Business Community

6. Forensic Auditors’ Services:
• Crafting questions to be posed
• Responding to questions posed
• Identifying documents to be requested and/or subpoenaed
• Identifying individuals to be most knowledgeable of facts
• Conducting research relevant to facts of the case
• Identifying and preserving key evidence
• Evaluating produced documentation and information for completeness
• Analyzing produced records and other information for facts
• Identifying alternative means to obtain key facts and information
• Providing questions for deposition and cross examination of fact and expert witnesses

7. Why are Forensic Auditors required?
They can resolve the matters by combining accounting knowledge & experience with respect
to:
• Fraud Prevention
• Fraud Detection
• Internal Controls Implementation and Review
• Compliance and Regulatory Functions
• Evidence Collection and Analysis
• Risk Management
• Court systems
• Filing requirements
• Investigative methodologies
• Assignments with regulatory agencies like SEBI, RBI. EOW etc.
• Professional body to provide expertise and literature in this fast growing field
• Communicating with audiences from attorneys & judges to victims & suspects

8. The services rendered by the forensic accountants are in great demand in the following
areas:
1. Criminal Investigation
Matters relating to financial implications the services of the forensic accountants are availed
of. The report of the accountants is considered in preparing and presentation as evidence.
2. Cases relating to professional negligence
Professional negligence cases are taken up by the forensic accountants. Non-conformation to
Generally Accepted Accounting Standards (GAAS) or non-compliance to auditing practices or
ethical codes of any profession they are needed to measure the loss due to such professional
negligence or shortage in services.
3. Arbitration service
Forensic accountants render arbitration and mediation services for the business community. Their
expertise in data collection and evidence presentation makes them sought after in this specialized
practice area.

9. 4. Fraud Investigation and Risk/Control Reviews
Forensic accountants render such services both when called upon to investigate specific
cases as well for a review of or for implementation of Internal Controls. Another area of
significance is Risk Assessment and Risk Mitigation.
5. Settlement of insurance claims:
Insurance companies engage forensic accountants to have an accurate assessment of claims
to be settled.
Similarly, policyholders seek the help of a forensic accountant when they need to challenge
the claim settlement as worked out by the insurance companies. A forensic accountant
handles the claims relating to consequential loss policy, property loss due to various risks,
fidelity insurance and other types of insurance claims.
6. Dispute settlement:
Business firms engage forensic accountants to handle contract disputes, construction claims,
product liability claims, infringement of patent and trade marks cases, liability arising from
breach of contracts and so on.

10. What characteristics should a Forensic
Auditor possess?
• Out of the Box Thinking
• Strong Visualization and Imagination
• Curiosity
• Persistence
• Detail-oriented
• Inquisitiveness
• Creativity
• Discretion
• Skepticism
• Confidence and
• Sound professional judgement.

11. What Skills should a Forensic Auditor
possess?
1. Auditing standards, procedures and related methodologies
2. Accounting & Business reporting systems
3. Information Technology
4. Data Analytics
5. Criminology
6. Legal Framework
7. Litigation processes & procedures
8. Investigative Techniques
9. Evidence gathering
10. Network of professional contacts in related fields’ viz. enforcement, regulatory
bodies, law, industry, peers etc.