What is a Forensic Audit?

A Forensic Audit is a specialized audit conducted to investigate financial anomalies, fraud, embezzlement, or any type of white-collar crime. It involves applying accounting, auditing, and investigative techniques to detect and document financial discrepancies for use in court or regulatory investigations.

Unlike a statutory audit, which assesses financial accuracy and compliance, forensic audits focus on tracing misappropriations, analyzing questionable transactions, and reconstructing records to determine intent and identify responsible parties.

Scope of Forensic Audit

At Saket Mahajan & Co., our forensic audit engagements typically include:

• Fraud Detection and Investigation
  Uncovering manipulation of financial records, fund diversion, bribery, kickbacks, asset misappropriation, and insider dealings.

• Tracing of Funds
  Following the money trail to determine where funds originated and where they ended up—crucial in cases of money laundering or fund siphoning.

• Asset Misappropriation
  Detecting unauthorized use or theft of inventory, cash, intellectual property, or company resources.

• Financial Statement Fraud
  Identification of intentional misstatements or omissions of financial information used to deceive stakeholders.

• Vendor and Procurement Fraud
  Reviewing vendor contracts, payments, and procurement processes to check for over-invoicing, collusion, or favoritism.

• Employee and Payroll Fraud
  Identifying ghost employees, falsified time sheets, and irregular bonus or reimbursement claims.

• Digital and Cyber Forensics
  Examining electronic data, emails, transaction logs, and IT systems to extract evidence and prevent cyber fraud.
  
  

When is a Forensic Audit Required?

A forensic audit is essential in situations involving:

• Allegations of financial fraud or whistleblower complaints

• Legal disputes involving shareholders or partners

• Suspicious transactions or unexplained losses

• Regulatory inquiries or internal compliance failures

• Investigations into potential money laundering activities

• Loan defaults where fund diversion is suspected

• Corporate restructuring or forensic due diligence

Our Approach to Forensic Auditing

1. Preliminary Assessment
   Understanding the scope of the issue, identifying stakeholders, and defining the objective of the audit.

2. Evidence Collection
   Gathering physical and digital records, financial data, internal communications, bank statements, contracts, etc.

3. Data Analysis & Red Flag Identification
   Applying investigative tools and techniques to identify anomalies, suspicious patterns, or tampered entries.

4. Interviews and Corroboration
   Conducting interviews with employees and management to validate findings and uncover concealed facts.

5. Documentation & Reporting
   Preparing a detailed forensic audit report with findings, evidence, flowcharts, and recommended actions.

6. Legal & Regulatory Support
   Assisting in litigation support, regulatory filing, and expert witness testimony if needed.

Key Benefits of a Forensic Audit

• Early detection of fraud and financial irregularities

• Prevention of reputational damage and financial losses

• Establishment of accountability and internal discipline

• Strengthened internal controls and corporate governance

• Credible evidence for legal and regulatory proceedings

• Restoration of stakeholder trust

Why Choose Saket Mahajan & Co. for Forensic Auditing?

• Experienced forensic accountants and investigative experts
• Confidential, discreet, and methodical handling of sensitive audits
• Ability to work under legal scrutiny and tight timelines
• Integration of accounting, legal, and IT forensics
• Proven track record in fraud risk assessments and litigation support