CS Professional · Internal and Forensic Audit · Basic Concepts of Forensic Audit
Under a forensic assignment at Rudra Steels Ltd, the examiner finds that the audit trail shows duplicate payments to a vendor owned by a relative of the finance head. Compared with a statutory auditor encountering the same item, which approach is most characteristic of the forensic auditor?
The forensic auditor pursues the item irrespective of amount, preserves evidence with a proper chain of custody, and examines intent and the people involved. Statutory auditors work with materiality and sampling, so this investigative, evidence-focused and person-oriented approach is typical of forensic audit.
- AEvaluate it only if the amount exceeds the overall materiality and then move on
- BPursue it irrespective of amount, preserve evidence and its chain of custody, and examine intent and the persons involvedCorrect
- CRely on management representation to resolve the matter
- DReport only the control weakness to the Audit Committee without examining the transactions
Explanation
Forensic work does not depend on materiality thresholds, stresses preserving evidence with chain of custody, and looks at intent and perpetrators. Materiality-based dismissal and reliance on management representation are statutory-style limitations that suit neither a suspected related-party fraud nor investigative objectives.
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