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CS Professional · Internal and Forensic Audit · Basic Concepts of Forensic Audit

Mehta Textiles Ltd suspects that its purchase manager has been approving payments to a fictitious vendor. A forensic auditor is engaged. Which step should logically come first in the forensic audit process?

The first step is understanding the allegation and defining the scope and objectives of the engagement. Evidence gathering, analysis and reporting follow this planning stage. Confronting the suspect or recommending action early would compromise evidence and pre-empt findings.

  1. APreparing the final report for submission to the court
  2. BUnderstanding the allegation and defining the scope and objectives of the engagementCorrect
  3. CConfronting the purchase manager with the suspicion
  4. DRecommending disciplinary action against the manager

Explanation

A forensic engagement starts with accepting the assignment, understanding the allegation and fixing scope and objectives. Reporting and recommendations come at the end. Confronting the suspect early would alert him and risk loss or tampering of evidence.

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