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

Sunrise Textiles Ltd suspects that its purchase manager, Mr. Rakesh, has been approving inflated invoices. The board appoints a forensic auditor. Which step should the forensic auditor normally take FIRST on accepting the assignment?

The forensic auditor should first define the scope and objectives and obtain proper authority and access to records. Confrontation or reporting come later, because acting early on suspicion could alert the suspect, risk destruction of evidence and weaken the investigation.

  1. AConfront Mr. Rakesh with the allegation to obtain a confession
  2. BDefine the scope and objectives of the engagement and secure authority and access to recordsCorrect
  3. CPrepare the final report for submission to the court
  4. DInform the vendors that they are under investigation

Explanation

A forensic engagement begins with understanding the allegation, agreeing the scope and objectives, and obtaining written authority and access to records. Confronting the suspect early risks tampering with evidence and comes only at the end of the evidence gathering. Reporting comes last.

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