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Forensic audit
The document outlines the essentials of conducting forensic audits, emphasizing the fraud triangle's elements: opportunity, pressure, and rationalization. It details the processes involved in a forensic investigation, the qualifications necessary for a forensic auditor, and the steps from accepting an investigation to court proceedings. Additionally, it highlights the importance of a thorough and well-structured forensic audit report, including examples of practical case studies.
Forensic audit
- 1. Forensic Audit By Mr.Keller Tobias
- 2. CPA Keller TobiasMouko Academic Q. BBM –Moi University MBA- Kenyatta University Professional Q. Cpa (k) Working Experience Lead Consultant at MOI; KSG; GGA; KIM (Mombasa)
- 3. Juggle Our Minds…. DayOne Recap..….
- 4.
- 5. Fraud Triangle….explained Opportunity conducive environmentand this can be tamed a bit through internal controls Pressure Financial pressure and sometimes pure greed or passion Rationalization Justification –we all doing it, unfairness etc
- 6. Todays Objectives….. FromYour Expectations………… Highlights on forensic and investigative audit When does an audit become a forensic audit? How to carry out forensic investigations Importance of forensic accounting and audit Writing quality fraud audit reports/sample report Practical approach to investigation (case studies)
- 7. Highlights on forensicaudit Forensic Audits are used to reveal the nature of fraud, how it was executed, who was involved and what was lost for Legal process to take effect. Elements of Fraud are:- 1. Victims reliance on the truth of the falsehood 2. Victims right to rely on the misrepresentation 3. The victims loss as a consequence of the reliance
- 8. Class Discussion Share amajor fraud you have come across in your work experience. (10 mins)
- 9. Differences btw Auditand Investigation
- 10. When to doa forensic audit? Any time as per to the clients request. Or based on the audit report, But you should check your capability…… Check below…
- 11. Who can conducta forensic audit Basically, one needs certain qualifications and skills to conduct a forensic audit:- A Bachelors degree in a relevant field Accountancy skills –demonstrated by being a member of ICPAK in good standing –A MUST Auditing skills –CPA, CIA, CISA etc TODAY –IT Skills are CRITICAL/EXPERTS RELIANCE –must demonstrate understanding of the technical aspects affecting the fraud. A very good communicator –spoken and written. Ambiguity or lack of clarity can free the criminal
- 12. Who can ……………. Excellent analytical and research skills A person of great curiosity …. A persistent investigator committed to a result Thinks creatively, progressively, outside the box Excellent attention to detail –anything in the data population can be golden A good listener and one with a good memory too – sometimes you need to gather facts without taking notes. IT CAN BE VERY RISKY TOO !!
- 13. HOW IS FORENSICAUDIT INVESTIGATION CONDUCTED Accepting the investigation Planning the investigation Gathering the evidence Perform the analysis Reporting Court Proceedings .
- 14. 1. Accepting theinvestigation The firm must ascertain whether or not they have the necessary tools, skills and expertise to go forward with such an investigation. They need to do an assessment of their own training and knowledge of fraud detection and legal framework.
- 15. 2. Planning theinvestigation The auditor(s) must carefully ascertain the goal of the audit so being conducted, and to carefully determine the procedure to achieve it, through the use of effective tools and techniques. Planning also includes the identification of the best mode to gather evidence.
- 16. 3. Gathering theevidence Gathering the evidence In forensic auditing specific procedures are carried out in order to produce evidence. The investigators can use the following techniques to gather evidence : • Testing controls which identifies the weaknesses, • Using analytical procedures to compare trends over time • Applying computer-assisted audit techniques, • Discussions and interviews with employees • Substantive techniques such as reconciliations, cash counts and reviews of documentation. ,,,,,,,,,,,Apply the Fraud Theory Approach
- 17. ……..Fraud Theory Approach a)Who might be the culprit? b) What happened? c) Why allegations might be true? d) What methods were used? e) When did the fraud happen? f) How did the fraud happen? g) Where is the evidence? h) In the accounts? i) Off-books? j) Direct or circumstantial?
- 18. 4. Perform theanalysis The actual analysis performed may involve calculating economic damages, summarizing a large number of transactions, tracing of assets, present value considerations
- 19. 5. Reporting Reporting Afterinvestigating and gathering evidence, the investigating team is expected to give a report of the findings of the investigation, and also the summary of the evidence and conclusion about the loss suffered due to the fraud.
- 20. 6. Court Proceedings Thelast stage expands over those audits that lead to legal proceedings. The auditors are called to the Court, and also included in the advocacy process.
- 21. Class at work…. Whatare the Importance Of Forensic Audit…to the client and to the public…..?
- 22. Forensic Report Your ForensicAudit Report must be Accurate, Complete, Relevant to and supported fully by evidence. The report is to a client. Importance of forensic audit reports • Product/proof of work done • Document for potential legal issues • Document for decision making and action • Marketing tool
- 23. Characteristics of agood forensic audit report 1. Objective / unbiased be neutral and non- judgmental. 2. Clear • The content of the report must be clearly understood. 3. Thorough • Includes all information needed to reach a conclusion. 4. Accurate • The content reflects facts as gathered. 5. Professional • Report must be professionally written and presented. 6. Timeliness • Issued within the expected
- 24. Structuring the report 1.Know all the facts 2. Know how you shall present all your information in a clear and logical manner 3. Understand the timelines and sequence of events 4. Identify the modus operandi 5. Have a clear understanding of the recommendations
- 25. Components of agood Report 1. Background How it all began 2. Executive summary Summarize actions and results 3. Scope Objective 4. Approach Method and participants 5. Findings Results of the investigation 6. Conclusion Wrap up investigation 7. Recommendations Follow-up actions 8. Appendices Exhibits and annexures
- 26. Case Studies 1. GuptasVs Anastacia. Pawn Shop theft by sneaking the pawn out of the shop. 2. Martona Vs Mohammed Inflated salaries Double invoicing and payments Over drawings.. Salary Advance diversion…
- 27. Practical Case…. Akamunya CreditSacco. Go through the Payment Schedule and Approve the payments.