Forensic Audit: A Check on Organisational Misdemeanor

Forensic Audit is generally aimed at preventing and detecting irregularities, including fraud, embezzlement and corruption. It takes and makes the application of auditing skills to have legal consequences; and “generally accepted accounting principles” that are recognized by accounting professional bodies as appropriate for reporting financial information relating to Government or otherwise.

A suspicion of a misdemeanor in an organisation, whether public or private, opens its financial records to an analysis and review. The records are made available to a forensic auditor and his team to extract facts, which can be used in a court of law. Forensic auditing is a specialty in accounting, making most major accounting firms to have a department of forensic auditing. Forensic audits include experience in accounting and auditing practices as well as expert knowledge of forensic audit’s legal framework.

Forensic audits cover a large spectrum of investigative activities. There may be a forensic audit to prosecute a party for fraud, embezzlement or other financial crimes. The auditor may be called in during the process of a forensic audit to serve as an expert witness at a court trial. Forensic audits could also include situations that do not involve financial fraud, but bankruptcy, dispute filing, business closures, and divorces.

The reliance on public institutions to provide public services in Nigeria has resulted in disappointing results as most chief executives of the institutions are found to take less interest in the success of their programmes, and have to account for the high level of fraudulent practices in those institutions.

Introduction of Fraudulent practices have stood as potent weapons capable of hemorrhaging the entire economy, particularly the public sector because of the high risk factor associated with such practices. The susceptibility of public institutions to fraudulent practices from within and without has not spared Nigeria. With an increasing commitment to this negative value by the emergent elite, a myriad of government businesses are fraught with one form of fraudulent practice or the other, and the sufferings of the people are on the increase.

When Forensic Audit is Imperative

Forensic audit investigations may expose, or confirm various kinds of illegal activities. Instead of a normal audit, a forensic audit is evolved if there is the possibility that the evidence gathered would stand legal proceedings in court.

The forensic audit process is similar to a traditional financial audit — planning, gathering evidence, and report writing — with the additional step of a possible appearance in court. Lawyers on both sides advice the defendant on the evidence to prove and sustain the harm or dismiss it before it goes to court.

Forensic Audit Processes

A forensic audit begins with the auditor and his team planning their investigation in the bid to meet their objectives. It is followed by the collection of evidence, which is sufficiently done and capable of proving in court the identity of the fraudster(s), revealing the details of the fraud and then clearly documenting the financial loss suffered and establishing the affected by the fraud. A report is consequently compiled on the established crime and given to the client for his or her use if the case is to be taken to court. In the event of the case being filed in court, the forensic investigator is present to clarify the evidence collected and state how the accused was found to have committed the crime.

Significance of Forensic Audit

The high level of frauds in modern organisations have made traditional auditing and investigation inefficient and ineffective in the detection and prevention of the types of frauds that are the order of the day today. Everywhere is replete with all manner of high profile cases involving many organisations. Fraud has eaten deep into every aspect of the Nigerian society to the extent that many organisations have lost confidence in their customers. The frauds in high and low places are worrying.

But accountants at all levels are duly being equipped with the prerequisites and knowledge of identifying, discovering and preserving the evidence of all forms of irregularities and fraud, and getting more involved in forensic accounting- the application of criminal methods, integration of accounting investigative activities and law procedures to detect and investigate financial crimes and other related accounting misdeeds, being a merger of forensic science and accounting (forensic accounting known also as investigative accounting or fraud audit) according to Dhar and Sarkar (2010).

How Best to Engage Forensic Audit

The evidence collected or prepared by a forensic accountant may be applied in different contexts. According to Curtis (2008), forensic accountants are essential to the legal system, providing expert services such as fake invoicing valuations, suspicious bankruptcy valuations, and analysis of financial documents in fraud schemes. Whatever an investigator intends to do will not be complete if the extent to which the person involved is not quantified. This is where the service of the experts, “forensic accountants” like the SSAC Advisory and Professionals in particular, are required and engaged for a very long time.

Forensic auditing could dig out frauds committed through application of auditing, accounting, and investigative techniques in the quest to unearth sufficient evidence that can be applied in court.

We Matter in Forensic Audit

A subsidiary of the renowned S.S Afemikhe & Co, a firm of Chartered Accountants, SSAC Advisory and Professionals has been very much involved in forensic auditing. It reviews and analyses financial and non-financial documents and records in the event of a fraud for use as possible evidence in the court, if prosecuted or to support strategic business decisions.

The company’s fraud investigators are certified financial investigators, identify problems and minimize the potential damage to businesses and secure needed evidences to obtain convictions. Its services are of standards required by law and clients, just as it applies quantitative methods, vast knowledge of law, research and investigative skills to bear on its activities. It’s equally well known for good evidence collection, analysis and evaluation, interpretation and findings and communication to reveal issues as they occur. SSAC diligently supports clients in the areas of Due Diligence reviews, Dispute Support Services, Security Fraud, Forensic Accounting, Investigations, Anti-money laundering and many others.

It similarly offers an unparalleled range of forensic accounting services, applying investigative and analytical skills for the purpose of resolving financial and non-financial issues and special skills in accounting, auditing and finance. It also uses quantitative methods and knowledge of the law, research as well as investigative skills.

SSAC’s forensic accounting services range from post-acquisition disputes, such as earn outs or breaches of warranties; bankruptcy, insolvency, and reorganisation; securities fraud; tax fraud; business disputes, natural and man-made catastrophes to lost profit. Others are business valuations, fraud and business interruption, products liability and product recall, subrogation, economic damages calculations, whether suffered through tort or breach of contract; money laundering and computer forensics/e-discovery.

SSAC establishes accounting controls as part of its processes and reviews all necessary financial and operational data. It also interviews key management members, staff, suppliers and customers, among its various ways to identify and measure economic damages and equip itself to provide its clients with the necessary information.

That being a diverse and potentially complex nature of accounting, it has helped to fine tune the company’s professional finesse. The company is now routinely retained for evaluations that require extensive knowledge of accounting, business, operational and manufacturing processes as its proven expertise and keen investigative insight enable it to accurately to assess and resolve even the most complex and contentious matters.

Quality forensic accounting has become a vital part of business. SSAC forensic accounting experts have the capability of helping you to achieve a successful outcome. They combine wider sector knowledge with extensive expertise to guide you through the technicalities of financial investigation and dispute resolution, just as they are known to have widely tried-and-tested experience of providing expert witness services in court. SSAC fraud investigators are financial detectives, isolating problems swiftly, minimizing the potential damage to your business and securing the evidence needed to obtain a conviction or convictions. The experts are highly experienced in providing testimony in court, drawing on accounting, auditing, tax and financial expertise as well as their specific knowledge of court procedures. They provide business intelligence services for major transactions and its business intelligence service and knowledge of local culture draws on a worldwide network to obtain information that cannot be easily accessed. This is capable of providing a reassurance in areas that standard due diligence does not cover.

Areas involving fraud, disputes between parties or allegations of corruption require close examination of books and records, agreements and other financial documentation to determine what really happened. SSAC is deeply involved in these. It investigates, collate and analyse corporate books, records and other financial information to provide clear and concise evidence-based reports to boards, management and regulators in accordance with court standards. Where necessary, it assists counsels and clients throughout a litigation cycle, from discovery and loss quantification to asset recovery at a successful claim. SSAC forensic accounting teams are of eminence- chartered accountants, forensic accountants, traditional investigators and compliance specialists. They react quickly and confidentially to safeguard assets and reputation, efficiently gathering facts, analysing the issues, and preparing reports and presentations of regulatory and judicial scrutiny.

When it’s of non-litigation, it applies its significant forensic accounting and financial forensic consulting experience to investigate allegations and document findings pertaining to occupational and financial fraud and other financial improprieties, assists in the preparation of proof of report loss required by an insurance company, communicate with the Board or senior management of the defrauded entity and with law enforcement agencies as the EFCC, ICPC, the Intelligence Unit or the police to reconstruct and decipher disputed business transactions based on available documents, including financial statements, income tax returns, internal accounting reports- the general ledger, customer and vendor invoices, bank statements and relevant contracts.

Forensic accounting, being investigative accounting of matters that may lead to legal confrontations, SSAC uses her forensic accounting expertise for civil and criminal litigations and testifies as a forensic accounting firm.

Forensic accounting is in the limelight, no thanks to the rapid increase in financial frauds and white-collar crimes across our shores but it remains to be fully exploited.

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