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CS Professional · Internal and Forensic Audit · Audit and Investigations

A forensic auditor's draft report on an alleged diversion of funds at Kaveri Pharma Ltd concludes that the finance manager 'is guilty of fraud'. The evidence shows he approved payments to a shell entity but his intent has not been established. What is the most appropriate correction?

The report should present the facts, supporting evidence and the basis of the findings, and leave the question of guilt to the competent legal authority. A forensic auditor does not pronounce legal guilt; the report must remain objective, evidence-based and independent.

  1. ARetain the conclusion because approval of payments proves guilt
  2. BState the facts found, the evidence and the basis, and leave the determination of guilt to the competent legal authorityCorrect
  3. CRemove the finding altogether since intent is uncertain
  4. DReplace the conclusion with the opinion of the board chairman

Explanation

A forensic report should be factual, objective and supported by evidence. Whether a person is guilty is a legal determination for a court or authority, so the auditor reports the findings and their basis. Dropping the finding hides a material fact, and relying on the chairman's opinion compromises independence.

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