How to Conduct a Lifestyle Audit: An Introduction

Unlock the essentials of Lifestyle Auditing with this clear, practical introduction. This presentation breaks down why lifestyle audits matter, how they reveal hidden red flags, and the proven methods investigators use to detect undisclosed income, concealed assets, and sudden lifestyle changes. Whether you’re a compliance officer, forensic investigator, auditor, or simply curious about financial accountability, this guide offers a step-by-step overview of tools like the Net Worth Method, Cash-T Method, and Source & Application of Funds Method.

Learn how to:

Spot spending patterns that don’t align with declared income

Identify assets, liabilities, and income sources with precision

Recognize common concealment tactics such as offshore transfers or asset shifting

Apply lifestyle auditing techniques in both corporate and government contexts

With lifestyle audits now compulsory in many sectors, this presentation is a must-watch for professionals in fraud detection, governance, and risk management.

👉 Perfect for training, academic study, or professional development, this SlideShare will help you understand not just the “what” but the “how” of lifestyle auditing.

1. Lifestyle
Auditing

2. Lifestyle Audit
Attempting to determine if the
lifestyle of an employee is consistent
with their known income.

3. Why conduct a
lifestyle audit?

4. It is a useful tool for identifying:
Spending patterns
& red flags
Living beyond
known income
Sudden (lavish)
lifestyle changes

5. Some lifestyle changes include:
Gambling/betting
habits
School fees Brand-
name/designer
goods
Bond/loan
repayments
Travel

6. Some lifestyle changes include:
Luxury
vehicles
Jewellery Acquisition of
property
Improvements
upon property
Stock
purchases

7. Conducting a
Lifestyle Audit

8. Identify:
Assets Liabilities
Income
sources
Significant
expenses

9. Common
Assets
Property
Vehicles
Cash
Jewellery

10. Common
Liabilities
Loans
Credit Cards
Bills & Accounts Payable
Instalment Purchases

11. Common Income Sources
•Salary
•Gifts
•Dividends
•Inheritance

12. The Net
Worth Method

13. The Net Worth Method
Calculates the difference between
a subject’s assets & liabilities over
a period.
Used when subject has few assets
& evidence of income is available.

14. The Net Worth Method
Assists in making circumstantial determination of concealed
income that may require further investigation.
Change in Net Worth for Period + Living Expenses for Period =
Funds Required for Period
(Net Worth = All Assets –All Liabilities)

15. The Cash-T
Method
Compares cash received with cash spent. If
received cash exceeds spent cash, that could
indicate undisclosed income.

16. The Cash-T Method
Cash received is on the Debit side of T-account.
Cash spent is on the Credit side of T-account.

17. Source &
Application of
Funds Method
Theorises that outflow of funds exceeding inflow of
funds indicates undisclosed income.

18. Source & Application of Funds Method
Inflow of funds are Sources.
Outflow of funds are Applications.

19. Source & Application of Funds Method
Sources (Inflow of Funds)
•Profits from trading
•Sales of assets
•Dividends
•Salary
Applications (Outflow of Funds)
•Loss of funds from trading
•Purchase of assets
•Purchase of investments
•Business expenses

20. Common Methods of Hiding Assets
Transferring assets
to family or other
affiliated persons;
Transferring assets
to trust;
Repaying bond or
credit card
accounts;
Transferring assets
offshore.

21. Lifestyle audits compulsory
for government departments
from 01 April 2021.

22. Sources of
Information

23. Sources of Information
•CIPC
•Deeds Office / Windeed
•Credit Bureaus (ie. Experian, TransUnion)
•SARS VAT Vendor Search:
https://secure.sarsefiling.co.za/vatvendorsearch.aspx
•Banks (per subpoena)
•Social Media / News Sites + Search Engines
•Master of the High Court (for Trust Deed)

24. Thank you.