Roles and Responsibilities of Forensic Auditor
If there’s a case in a court concerning funds/money, for an evidence to be found, a forensic auditor is called to carry out the investigation.
Well, from this, you might be now having a clue about what a forensic audit is all about. Lucky for you, you won’t have to strain your brain for here is the meaning.
A forensic audit/forensic accounting is an examination carried out on a particular individual’s or organization’s financial statements/information to act as evidence regarding a case of fraud.
Here is the role of the forensic auditor:
The investigation is carried out focusing the suspicion of the client. If a client suspects there might be some fraud going on in his company on the materials supplied for example. The forensic auditor goes ahead to find out:
- What type of fraud is being carried out (if there’s any) ?
- The time the fraud has been taking place
- How the fraud was concealed, and the people involved in it
- The impact of the fraud on the company
This is the critical part of the investigation since it is the main reason for the auditing to be carried out. The forensic auditor is expected at the end out of the audit to present full evidence showing the type of fraud that was carried out, the effect of the fraud to the company and also the people involved in the fraud.
Here are the techniques used to gather evidence.
- Substantive Procedure
This is where the auditor reviews the entire documentation o the company concerning the area of investigation to find out if there are any material statements which are not accurate, the validity of the materials and review on the accuracy of the financial records.
- Analytical Procedure
This helps the auditor to understand the client’s businesses and changes in the business. He uses this to compare the different periods of time on the expenditure/budget of the company for example.
- Software Programs
The forensic auditors have their own software programs that are able to detect any fraud that might have been carried out using technological devices like computers.
- Internal Controls
The forensic auditor takes time to understand and test all the internal control system in order to find out if there are any holes in the system that would have allowed the fraud t take place.
The forensic auditor interviews the suspect(s) to try to get additional information about the fraud.
At the end of the audit, the auditor makes a report regarding the fraud to the client.
The report should include:
- Findings of the report
- Evidence summary
- Information on how the fraud was carried out
- Recommendations on how the fraud can be avoided from occurring in the future
The report is the one that the client uses as evidence in the court if he decides to file a case.
During the court proceeding, the auditor must be present in order to explain how he collected the evidence and also how he identified the suspect(s).
The auditor should explain all the process using simple terms (this is for people who don’t understand the accounting terms).
That being said, it is true that a forensic auditor plays a very big role but he does not work alone. In order to get to hire a forensic auditor, you must decide on which the forensic accounting firm to contact.
Best Forensic Accounting Firms
here are some of the Best Forensic Accounting Firms (with their addresses)
These firms have been rated as the best in 2018 because if their awesome forensic accounting services.
- ORBA (Ostrow Reisin Berk & Abrams)
NBC Tower – Suite 1500 455 N. Cityfront Plaza Dr.
Chicago, IL 60611
They offer full counting, tax, and financial consultation services.
2. Lombardo Wagner Ayers & Company
Lombardo Wagner Ayers & Company
201 Defense Highway
Annapolis, MD 21401
Phone: (410) 263-4201
Lombardo Wagner Ayers & Company
300 Talbott Street Suite B
Easton, MD 21601
Phone: (410) 763-9222
They have professionals who have a wide knowledge of tax. (they generally deal with tax)
3. Wilson & Associates
6965 Northwestern Ave
Chicago, IL 60645
They provide tax, business planning, accounting, and HUD (Housing and Urban Development) auditing services.
4. Allen Barron
300 Montgomery Street Suite 410
San Francisco, CA 94101
16745 West Bernardo Drive, Suite 260
San Diego, CA 92127
They provide tax, accounting business financial, and management advisory services.
5. Shepard Schwartz & Harris
Shepard Schwartz & Harris
123 North Wacker Drive, Suite 1400
Chicago, IL 60606
They provide accounting, auditing, information technology consultation, valuation, forensic accounting, tax, and business advisory services to middle market businesses.
Now that you know all that, forensic auditing has another importance apart from providing evidence in a case.
Importance of Forensic Auditing/Accounting in an Organization
Some Importance of Forensic Accounting in an Organization are:
Frauds make an organization experience huge losses, but with the help of forensic auditor, an organization is able to know the kind of fraud that has been going on and how to curb it reducing the organization’s losses.
Forensic accounting helps in enhancing the efficiency of an organization by giving recommendations on how the current financial processes and standards can be upgraded and be safer
3. Finance Management
Forensic auditor acts as a third eye in checking the financial statements making sure the funds were used solely for the organization’s purposes and not personal.
4. Exploitation Risk
The forensic accountant helps in identifying any loopholes in organizations processes and gives recommendations on how the client can seal the loopholes.
In doing this, exploitation risks are reduced since all the loopholes are sealed.
In order to keep track of your financial statements and to make sure you don’t unnecessary losses, you need a forensic auditor by your side.