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Auditing text book

1. FORENSIC AUDIT
By Silayo, ErastoS

2. Introduction
•Aforensicauditisanexaminationandevaluationof
Individual'soracompany'sfinancialinformationfor
useasevidenceincourt.Aforensicauditcanbe
conductedinordertoprosecuteapartyforfraud,
embezzlementorotherfinancialclaims.Inaddition,
aforensicauditmaybeconductedtodetermine
negligence,misuseofpowersoreventodetermine
unduebenefitsgiventoanyothercompanyor
individual.
•Forensicauditisalsoconductedonbehalfofthe
banksandfinancialinstitutions, insolvency
professionalagency,orManagement ofthe
company.

3. Introduction
•Itistheprocessusedtoexamineanindividual’sor
company'sfinancialinformationforuseasevidence
incourt.Ithelpsdetectdiversionoffunds,willful
defaultsandwindow dressingoffinancial
statements.
•Aforensicauditisthereforeanindependentand
comprehensiveprocessofreviewingaperson’sor
thecompanyfinancialstatementstodetermineif
theyareaccurateandwhetherornotanyfinancial
benefithasbeenattainedbywayofpresentingan
unrealisticpictureoranyillegalactivity.

4. Objectives of Forensic Auditing
•Tousetheforensicauditor’sconclusionsto
facilitateasettlement,claim,orjuryawardby
reducingthefinancialcomponentasanareaof
continuingdebate.
•Toavoidfraudandtheft.
•Torestorethedowngradedpublicconfidence
•Toformulateandestablishacomprehensive
CorporateGovernancepolicy.

5. Objectives of Forensic Auditing
•Tocreateapositiveworkenvironment.
Aforensicauditorcanensuretheintegrityand
transparencyoffinancialstatementsbyactively
investigatingforfraud,identifyingareasofriskand
associatedfraudsymptomsandagoodfraud
preventionprogramcanhelptocreateapositive
workingenvironmentwhereemployeesdonot
indulgethemselvestoabusetheirresponsibilities.
So,byhelpingcompaniestopreventanddetect
fraudstheforensicauditorscanhelptoestablisha
comprehensiveCorporateGovernancePolicy.

6. Forensic Audit services typically include
•Financial Statement
•Computer Forensic
•Electronic Discovery
•Bankruptcies, Insolvencies, and
reorganizations
•Workplace fraud investigations
•Calculation of economic losses
•Business valuations
•Professional negligence

7. Forensic Audit Methodology
Forensicauditisaprocessofresolvingsignsorallegations
offraud/misrepresentationfrominceptiontodisposition.
Forensicauditinvolveseffortstoresolveallegationsor
signsoffraudwhenthefullfactsareunknownorunclear;
therefore,itseektoobtainfactsandevidencetohelp
establishwhathappened,identifytheresponsibleparty,
andproviderecommendationswhereapplicable.
Whenconductingtheforensicaudittoresolvesignsor
allegationsoffraud,theforensicauditorshould:
•Assumelitigationwillfollow.
•Actonprediction.
•Approachcasesformtwoperspectives.
•Movefromthegeneraltothespecific.
•Usethefraudtheoryapproach.

8. Forensic Audit Procedures
•Data Analysis
•Analytical Procedures
•Inspection
•Observation
•External Confirmation
•Recalculation
•Re-Performance
•Inquiry
•Interviews

9. Fraudster's Generic Profile
Scan your team members for following conditions:
•Living beyond one's means.
•Experiencing financial difficulties.
•Unusually close association with vendors/customers.
•Excessive work pressure.
•Control issues; unwillingness to share duties.
•Complaints about pay.
•Divorce/family problems.
•Irritability, suspiciousness or defensive.
•Addiction problems.
•Refusal to take vacations.
•Enjoy superior's trust.
•Prefer to work alone.
•Unusually normal person.

10. Fraud triangle

11. Fraud triangle and fraud risk
Afraudtriangleisatoolusedinforensicauditingthat
explainsthreeinterrelatedelementsthatassistthe
commissionoffraud-Pressure(motive),opportunity
(abilitytocarryoutthefraud)andrationalization
(justificationofdishonestintentions).
Fraudriskisthevulnerabilityacompany/organisation
hastothosewhoarecapableofovercomingthethree
elementsinthefraudtriangle.

12. Fraud triangle and fraud risk
Fraudriskassessmentistheidentificationoffraudrisks
thatexistinthecompany/organisation.Theplanning
involvestheformulationoftechniquesandprocedures
thatalignwiththefraudriskandfraudriskmanagement.
Planningalsoincludestheidentificationofthebest
way/modetogatherevidence.
Thus,itisnecessarythatampleresearchisdone
regardingcertaininvestigative,analytical,and
technology-basedtechniques,andalsorelatedlegal
process,withregardtotheoutcome ofsuch
investigation.

13. Pressure Factors
Forcewhichmakessomeonetodosomeact.Pressureiswhat
causesapersontocommitfraud.DesperatepeopledoDesperate
things.PressurescomesfrommanyformsasFinancialorNon
Financial.Forinstances:
RepaymentofDebt;
FallingStockPrices;
Tomaintainreputationetc.
PressurewithFinancialcontents:Suchpressuresmaybelong
termandshortterm.Thesearisewhenpeopleareinneedofcash.
Thesecanagainbeclassifiedasfollows:
•Greediness;
•Desiretolivewell;
•Highamountofpersonaldebtsandhealthexpenditures;
•Unexpectedfinancialneeds;

14. Pressure Factors
Pressurestemmingfrombadhabits:-Suchpressuresare
acceptedastheworstkindoffactorsmotivatingfrauds.The
mainreasonsforsuchpressuresaresomeattributesrelated
withhumanqualities.Suchattributesare:
•Gambling,Drugoralcoholaddict;
•NightLifehabit;
Pressuresrelatedwithjobs:Suchpressuresstemfromthe
following:
•BeingDissatisfiedwiththejob;
•Theideaofanunfairattitude;
•Notgettingpromotionwhenexpected;
•Lowerwagesstructures;
•NotadmiredbySupervisors.

15. Opportunity Factors
Thesefactorsdirectlyinvolvetopmanagement andowners
ofthebusinessinparticular.Thecontrolstructureofabusiness
andfraudhasinversecorrelationi.e.Betterthecontrol
structure;lowerthescopeofcommittingfraudandviceversa.
Thefollowingfactorsareresponsibleforprovidingopportunity
tocommitfrauds.
•Weakmoralpolicies;
•Undisclosedcontractsmadewiththirdpartiesandpartners;
•Incapabilitiestoassessthequalityofjobperformedbythe
employees;
•Absenceofwelldisciplinedenvironmentinwhichfraudsters
willbepublished;
•Ignorance,indifferenceandinabilitiesoftopmanagement;
•Lackofhealthyauditwork.

16. Efforts to justify fraud Factors
Itisthedefencemechanismoffraudstersinordertojustify
his/heraction.Theexamplesinclude:
•Ihadborrowedthemoney,Iwouldpayback;
•Thisisinreturnformyeffortsforthebusiness;
•Nobodyhassufferedasaresultofthis;
•Ihavetakenthemoneyforthegoodpurpose;
•Ididn’tknowthatthiswasacrime;
•Businesshasdeservedthis;
•Sincebusinessevadestax,Ihavetakensomethingwhich
wasalreadymine.
Inordertopreventallthesefactors,businessshould
establishmoralcodeandprovideemployeetraining.

17. Types of fraud
Theforensicaccountantcouldbeaskedto
investigatemanydifferenttypesoffraud.Themost
commoninvolvestheft,includingcash,inventoryand
fraudulentpayments.
Thethreecategoriesoffraudsarecorruption,asset
misappropriationandfinancialstatementfraud.
Theyareelaboratedinthefollowingslides:

18. a. Corruption
Therearethreetypesofcorruptionfrauds:conflictsofinterest,
bribery,andextortion.Researchshowsthatcorruptionisinvolvedin
aroundonethirdofallfrauds.
Inaconflictofinterestfraud,thefraudsterexertshis/herinfluence
toachieveapersonalgainwhichdetrimentallyaffectsthe
company.Thefraudstermaynotbenefitfinancially,butrather
receivesanundisclosedpersonalbenefitasaresultofthe
situation.Forexample,amanagermayapprovetheexpensesof
anemployeewhoisalsoapersonalfriendinordertomaintainthat
friendship,eveniftheexpensesareinaccurate.
Briberyiswhenmoney(orsomethingelseofvalue)isofferedin
ordertoinfluenceasituationinone’sfavour.Forexample,Tele
smithbribinganemployeeofTechnosmithcompanytoprovide
certaindatatoaidTelesmithinpreparingatenderoffertoTechno
smith.
Extortionistheoppositeofbribery,andhappenswhenmoneyis
demanded (ratherthanoffered)inordertosecureaparticular
outcome.

19. b. Assets misappropriation
Byfarthemostcommon fraudsarethoseinvolvingasset
misappropriation,andtherearemanydifferenttypesoffraud
whichfallintothiscategory.
Thecommonfeatureisthetheftofcashorotherassetsfromthe
company,forexample:
•Cashtheft:Misappropriationofcash,thestealingofphysical
cash,forexamplepettycash,fromthepremisesofacompany.
•Fraudulentdisbursements:raisingfakeinvoices,companyfunds
beingusedtomakefraudulentpayments.Commonexamples
includebillingschemes,wherepaymentsaremadetoa
fictitioussupplier,andpayrollschemes,wherepaymentsare
madetofictitiousemployees(oftenknownas‘ghost
employees’).
•Inventoryfrauds:thetheftofinventoryfromthecompany.
•Misuseofassets:employeesusingcompanyassetsfortheirown
personalinterest.

20. c. Financial statements fraud
Thisisalsoknownasfraudulentfinancialreporting,
andisatypeoffraudthatcausesamaterial
misstatementinthefinancialstatements.
Itcanincludedeliberatefalsificationofaccounting
records;omissionoftransactions–eitherrevenueor
expenses,non-disclosureofrelevantdetailsfromthe
financialstatements,balancesordisclosuresfromthe
financialstatements;orthemisapplicationof
financialreportingstandards.

21. c. Financial statements fraud
Thisisoftencarriedoutwiththeintentionof
presentingthefinancialstatementswithaparticular
bias,forexampleconcealingliabilitiesinorderto
improveanyanalysisofliquidityandgearing.
Companiesgetintothistypeoffraudtotrytoshow
thecompany’sfinancialperformanceasbetterthan
whatitactuallyis.
Thegoalofpresentingfraudulentnumbersmaybeto
improveliquidity,ensuretopmanagement continue
receivingbonuses,ortodealwithpressureformarket
performance.

22. Procedure for forensic audit investigation
Theinvestigationprocessissimilartoregularaudit
offinancialstatements.
Theforensicauditorshouldtakestepsforplanning,
reviewandareport.Iftheinvestigationistobe
conductedtounearththefraudinrespectof
purchases,thenacompleteinvestigationistobe
conductedforduediligenceofallthesuppliersof
thecompany.

23. Procedure for forensic audit investigation
Hewillalsoaccessthequantumoflossessufferedbythe
company.Thefindingsarepresentedtotheclientorthe
appointingauthority.
Thus,theprocedureforforensicauditwillbechanged
accordingtotherequirementandtypeoftheforensic
audit.
Themethodforconductingforensicauditareasfollows:
Thisinvestigationwillincludeverificationofthepricesat
whichthegoodsaresuppliedbythevarioussupplierswith
thepricesprevailinginthemarketfromthethirdparty
sources.
Theremaybeinstancesofbogusbillsbeingaccountedfor
intothebooksofaccountswithoutreceivingthegoods.The
forensicauditorhastocollecttheevidencetounearththe
fraud.

24. Situation oriented procedures
•Meetingwiththeclientandacceptingthe
engagement
•Performingconflictcheck
•Performinginitialinvestigation
•Planningtheauditorformationofrobustactionplan
•Gatheringrelevantevidence
•Analysisofevidencesandothersupporting
information
•PreparationofReport

25. Procedures forconducting
forensicauditaredetailedinthe
followingslides

26. 1. Accepting the investigation
Theforensicauditormustinitiallyconsiderwhether
theirfirmhasthenecessaryskillsandexperienceto
acceptthework.
Forensicinvestigationsarespecialistinnature,and
theworkrequiresdetailedknowledgeoffraud
investigationtechniquesandthelegalframework.
Investigatorsmustalsohavereceivedtrainingin
interviewandinterrogationtechniques,andinhow
tomaintainthesafecustodyofevidence
gathered.

27. 1. Accepting the investigation
Additionalconsiderationsincludewhetherornotthe
investigationisbeingrequestedbyanauditclient.
Ifitis,thisposesextraethicalquestions,asthe
investigatingfirmwouldbepotentiallyexposedtoself-
review,advocacy andmanagement threatsto
objectivity.
Unlessrobustsafeguardsareputinplace,thefirm
shouldnotprovideauditandforensicinvestigation
servicestothesameclient.
Commercialconsiderationsarealsoimportant,and
ahighfeelevelshouldbenegotiatedtocompensate
forthespecialistnatureofthework,andthelikely
involvementofseniorandexperiencedmembersof
thefirmintheinvestigation.

28. 2. Planning the investigation
Theinvestigatingteammustcarefullyconsiderwhat
theyhavebeenaskedtoachieveandplantheirwork
accordingly.Theobjectivesoftheinvestigationwill
include:
•Identifyingthetypeoffraudthathasbeenoperating,
howlongithasbeenoperatingfor,timeperiodduring
whichthefraudhasoccurredandhowthefraudhas
beenconcealed;
•Identifyingthefraudster(s)involvedorperpetratorsof
thefraud;
•Quantifyingthefinanciallosssufferedbytheclient;
•Gatheringevidencetobeusedincourtproceedings;
•Providingadvicetopreventthereoccurrenceofthe
fraud.

29. 3. Gathering evidence
Inordertogatherdetailedevidence,theinvestigator
mustunderstandthespecifictypeoffraudthathasbeen
carriedout,andhowthefraudhasbeencommitted.
Theevidenceshouldbesufficienttoultimatelyprove
theidentityofthefraudster(s),themechanicsofthe
fraudscheme,andtheamountoffinanciallosssuffered.
Itisimportantthattheinvestigatingteamisskilledin
collectingevidencethatcanbeusedinacourtcase,
andinkeepingaclearchainofcustodyuntilthe
evidenceispresentedincourt.
Ifanyevidenceisinconclusiveortherearegapsinthe
chainofcustody,thentheevidencemaybechallenged
incourt,orevenbecomeinadmissible.

30. 3. Gathering evidence
Investigatorsmustbealerttodocuments being
falsified,damagedordestroyedbythesuspect(s).
Commontechniquesusedforcollectingevidenceina
forensicauditincludethefollowing:
•Testingcontrolstogatherevidencewhichidentifies
theweaknesses,whichallowedthefraudtobe
perpetrated;
•Usinganalyticalprocedurestocomparetrendsover
timeortoprovidecomparativesbetweendifferent
segmentsofthebusiness;
•Applyingcomputerassistedaudittechniques,for
exampletoidentifythetimingandlocationof
relevantdetailsbeingalteredinthecomputersystem;

31. 3. Gathering evidence…. (Cont.)
•Discussionsandinterviewswithemployeesorsuspect(s);
•Understandinginternalcontrolsandtestingthemsoasto
understandtheloopholeswhichallowedthefraudtobe
perpetrated;
•Substantivetechniquessuchasreconciliations,cash
countsandreviewsofdocumentation.
Theultimategoaloftheforensicinvestigationteamisto
obtainaconfessionbythefraudster,ifafrauddidactually
occur.
Forthisreason,theinvestigatorsarelikelytoavoid
deliberatelyconfrontingtheallegedfraudster(s)untilthey
havegatheredsufficientevidencetoextractaconfession.
Theinterviewwiththesuspectisacrucialpartofevidence
gatheredduringtheinvestigation.

32. 4. Forensic data analysis (fda)
FDAisthetechnologyusedtoconductfraud
investigations;theprocessbywhichevidenceisgathered,
summarizedandcomparedwithexistingdifferentsetsof
data.
Theaimhereistodetectanyanomaliesinthedataand
identifythepatternofsuchanomaliestoindicate
fraudulentactivity.
Suchananalysisrequiresthreekindsofexpertise,
1.Dataanalysttoperformthetechnicalstepsandwrite
thequeries
2.Teammember withextensiveexperienceofthe
processesandinternalcontrolsintherelevantareaof
theinvestigatedcompany
3.Aforensicscientistwhoisfamiliarwithpatternsof
fraudulentbehaviour.

33. 5. reporting
Theclientwillexpectareportcontainingthefindingsof
theinvestigation,includingasummaryofevidenceand
aconclusionastotheamountoflosssufferedasaresult
ofthefraud.
Thereportwillalsodiscusshowthefraudstersetupthe
fraudscheme,andwhichcontrols,ifany,were
circumventedbasicallythewholetrailofevents.
Itisalsolikelythattheinvestigativeteamwill
recommend improvements tocontrolswithinthe
organisationtopreventanysimilarfraudsoccurringin
thefuture.

34. 6. Court proceedings
Theinvestigationislikelytoleadtolegalproceedings
againstthesuspect,andmembersoftheinvestigative
teamwillprobablybeinvolvedinanyresultantcourt
case.
Theevidencegatheredduringtheinvestigationwillbe
presentedatcourt,andteammembersmaybecalled
tocourttodescribetheevidencetheyhavegathered
andtoexplainhowthesuspectwasidentified.
Itisimperativethatthemembersoftheinvestigative
teamcalledtocourtcanpresenttheirevidenceclearly
andprofessionally,astheymayhavetosimplifycomplex
accountingissuessothatnon-accountantsinvolvedin
thecourtcasecanunderstandtheevidenceandits
implications.

35. Systems of fraud
•Delayed submission of returns information etc;
•Delayed remittances into Bank;
•Delay or non preparation of Bank reconciliation
statements;
•Lifestyle of promoters/ directors and key employees;
•Continued internal control lapses and not following norms
of corporate governance.
INTERNAL INDICATORS
•Delay in finalisation of accounts;
•Frequent changes in accounting policies;
•Continuing losses;
•Over drawl of loans and advances;
•Higher cost per unit of production
•High amount of losses or wastage shown in books vs.
norms;
•High investment in group companies;
•Profit not supported by increased cash availability.

36. POSSIBLE AREAS WHERE FRAUD CAN BE
COMMITTED IN CORPORATE SECTORS
•Misappropriationofcashbyfodgingaccounts;
•Raisinghugeamountoftermloanfrombanksand
financialinstitutionbymeansofinflatingtheprojectcost
byoverinvoicingtheplant&machineryandcomponents
purchasedforsettinguptheprojectandthendivertingof
inflatedamountfornonbusinessuse;
•Raisingofexcessworkingcapitalloanfrombanksbyover
valuingtheinventoryandbookingofbogusexpensesetc.
anddiversionoffundsforpersonalgains;
•Usinginterbranchtransactionforcreationoffictious
entriesbyrotationofchequesforraisingequitycapitalof
acompanywithoutbringinganymoneyinthecompany.

37. POSSIBLEAREAS WHERE FRAUD CAN BE
COMMITTEDINCORPORATESECTORS…(cont.)
•Fictiouscapitalraisedbythecompaniesintheabove
mannerareusedshowingthemaspromoterscontributionin
ordertoraiseloansfrombanksandfinancialinstitutions;
•Sharecertificatesissuedonbasisofsuchfictitiouslycreated
equitycapitalarealsosoldtothepublicatahighlyjacked-
uppriceformakingmoneyinfraudulentmannerfromshare
market;
•Raisingoffictitiousbillsofsaleandpurchasebydoingcircular
tradingentriesofsalesandpurchasesamonggroup
companieswithoutmovementofgoodsandusingsuchbills
fordiscountingwithbanksforcollectingfundsfromthe
banks.;
•Misappropriationofthefundsprovidedbybankson
discountingofexportbillsissuedinthenameofforeign
buyersunderdisguise.

38. POSSIBLEAREASWHERE FROUD CAN BE
COMMITTEDINCORPORATESECTORS…(cont.)
•Falsificationofannualaccountsofthecompaniesto
showinflatedturnoveraswellasinflatedprofitsandin
thiswaydeclaringgoodworkingresultstostakeholders
aswellasbankinordertomisleadthemforattracting
moreinvestmentfrompublicandcreditfacilitiesfrom
banks;
•Accountsarealsofalsifiedtoconcealtrueresultsof
operations,orfinancialpositionofthecompanywitha
viewtopreventtimelydetectionofcorporatefrauds.
•Cheatinginforeignexchangetransactionbyshowing
asfictiousexports;

39. POSSIBLEAREASWHEREFROUDCANBE
COMMITTEDINCORPORATESECTORS…(cont.)
•Floatingofmanycompanies/firmsonpaperwithout
anysignificantbusinessandusingvariousbank
accountsopenedinthenamesofthesecompaniesto
misappropriatefundsdivertedtothemfromthecredit
facilityavailedfrombankaswellasinvestments
receivedfrompublic;
•Generallyemployeesofthemaincompany(indulging
intofraudulent activities)are shown as
directors/partnersofsuchcompanies/firms(usedfor
divertingthefundreceivedfrompublicandbanks)and
theydonotknowanyoftheaffairsofthese
companies/firmsexceptsigningofthechequesissued
bythesecompanies/firms;

40. Modus -operandi
Loans&Advances
•FakeCACertificates/FinancialStatements;
•BogusInvoices/quotations/bills;
•Fraudulentremovalofstockscharged;
•Inflatedvaluationsofsecurities;
•Fakeforgedpropertydocuments;
•Fake/WrongsearchReports;
•Diversionoffundsthroughbogussistersconcerns;
•Deposits/miscellaneousareas;
•Un-authorisedloansagainstdeposits/NRIdeposits;
•ATMFraudsbystealingPINs/interceptionofcards;
•Encashmentofstolen/forgedfinancialinstruments
throughfictiousaccounts;
•Misuseofother’spasswordsformisappropriationof
funds

41. How can you reduce liability and instances of fraud?
•Itishighlyrecommended thatcompaniesharboura“stop
beforeitstartspolicy”bycreatingatransparentworking
environment.
•Employteamstoconductafrequentanalysisofthefraud
trianglekeepinginviewtheworkingatmosphereinthe
company.
•Comeupwithpoliciestoworkonthe‘rationalisation’aspect
ofthefraudtriangletostrikeattherootoftheproblem.
•Followadynamicapproachwhiledefiningfraudinthe
companytransactionskeepinginmindtheongoingscenario
ofwhitecollarcrimes.
•Theinstitutionofstronginternalcontrolsandanti-fraud
technologiesintheelectronicplatform.
•Thoroughandfrequentevaluationofthecompany’scodeof
conduct.
41

42. Difference between forensic audit and statutory audit
S.
No
Basis Statutory Audit Forensic Audit
1.Objective To express opinion as to
‘true & fair’
presentation.
To determine correctness of
the accounts or whether any
fraud has actually taken
place.
2.Techniques‘Substantive’ and
‘compliance’
procedures.
Analysis of past trend and
substantive or ‘in depth’
checking of selected
transactions are done.
3.Period Normally all transactions
for the particular
accounting period are
considered.
There is no such limitations
while conducting forensic
audit and accounts may be
examined in detail from the
beginning.

43. SI.
No.
Basis Statutory Audit Forensic Audit
4. Management
Representation
Auditor relies on the
management
certificate/representation
of management.
Independent verification
of suspected/selected
items carried out
5. Off balance-
sheet items (like
contracts etc.):
Off balance-sheet items
are used to vouch the
arithmetic accuracy &
compliance with
procedures.
Regularity and propriety
of these
transactions/contracts
are examined.
6. Adverse
findings, if any
If there are any adverse
findings, negative opinion
or qualified opinion is
expressed, with/without
quantification.
The auditor aims at legal
determination of fraud
and also naming persons
behind such fraud.
Difference between forensic audit and statutory audit

44. Preparation of Report
Thereportgenerallyincludesvarioussections
describingthenatureofassignment,scope,approaches
utilized,findings,opinionandlimitations.Reportis
generallysubmittedtotheAppointingAuthority.
Thecontentsofthereportmayvarydependingupon
thesituation,thenatureandtheextentofthefrauds
andirregularitiesinvolved.
Thegeneralizedformofsuchforensicaccounting
investigationreportisasfollows:

45. Preparation of Report…(cont.)
1.TITLE OF THE REPORT
2.EXECUTIVE SUMMARY
3.BACKGROUND OF ENGAGEMENT
3.1. Origin
3.2. Objectives of Engagement
3.3. Proposed outputs of the Assignments
3.4. Implementation Approaches
4. ANALYSIS OF THE RISKS INVOLVED
4.1. Internal Environment Risks
4.2. External Environment Risks
4.3. Political and Legal Scenario
4.4. Risks from Customers, Suppliers and Competitors etc.
4.5 Business Process and Human Resources Management
4.6. Market, Operational and Technological Risks
4.7. Others

46. Preparation of Report…(cont.)
5. EVIDENCE OF RISK EVENTS
6. ANALYSIS and FINDINGS
7. AUDIT RECOMMENDATIONS
7.1. Logical Framework Approach
7.2. Preconditions and Risks
8. IMPLEMENTATION OF RECOMMENDATIONS
8.1. Budget Considerations
8.2. Stakeholders to be Engaged
9. LIST OF ANNEXURES

47. Conclusion
Insummary,aforensicinvestigationisaveryspecialisedand
detailedtypeofengagement,whichrequireshighlyskilledteam
memberswhohaveexperiencenotonlyofaccountingand
auditingtechniques,butalsooftherelevantlegalframework.
Therearenumerousdifferenttypesoffraudthataforensic
accountantcouldbeaskedtoinvestigate.
Theinvestigationislikelytoultimatelyleadtolegalproceedings
againstoneorseveralsuspects,andmembersoftheinvestigative
teammustbecomfortablewithappearingincourttoexplainhow
theinvestigationwasconducted,andhowtheevidencehasbeen
gathered.
Forensicaccountantsmustthereforereceivespecialisttrainingin
suchmatterstoensurethattheircredibilityandprofessionalism
cannotbeunderminedduringthelegalprocess.

48. THANK YOU