CS Professional · Internal and Forensic Audit · Audit and Investigations
Meridian Textiles Ltd. suspects that its purchase manager has been routing orders to a relative's firm at inflated rates. The board appoints an independent professional to examine the records with the aim of gathering evidence that could be presented before a court. Which description best fits this engagement?
The engagement is a forensic audit. It targets a specific suspicion of fraud and aims to gather and preserve facts and evidence that can be presented in court. A statutory audit gives a true and fair opinion, and an internal audit reviews controls generally.
- AA statutory audit focused on giving an opinion on true and fair view
- BA forensic audit aimed at establishing facts and evidence suitable for legal proceedingsCorrect
- CA routine internal audit of the purchase cycle for process improvement
- DA secretarial audit of compliance with company law
Explanation
A forensic audit examines specific suspicions of fraud or irregularity and collects evidence in a form that can be used in legal proceedings. A statutory audit gives an opinion on the financial statements, and a routine internal audit tests controls and efficiency, not evidence for litigation. The engagement here is targeted and evidence-oriented, so forensic audit fits.
Did you get it right without looking?
One question tells you little. A timed set on Audit and Investigations shows your real accuracy, how long you take and where you lose marks.
More Audit and Investigations questions
- An investigator at Ganga Infra Ltd. has completed fieldwork on suspected diversion of funds. Interviews and documents show loss of ₹48 lakh,…
- Before starting an investigation into suspected cash misappropriation at Kaveri Foods Pvt. Ltd., the forensic investigator is asked by the m…
- Sagar Steels Ltd. engages a forensic auditor after a whistle-blower complaint on diverted funds. The auditor's report is likely to be challe…
- During a forensic review of suspected vendor payment fraud at an Indian manufacturing firm, the forensic auditor finds that the original inv…
- During a forensic review of suspected vendor payment fraud at Kaveri Textiles Ltd, the forensic auditor finds the original purchase invoices…
- A forensic auditor seizes a suspect employee's laptop during an investigation into data theft at a Pune IT company. To keep the digital evid…