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CS Professional · Internal and Forensic Audit · Audit and Investigations

Which statement correctly distinguishes a forensic audit from a statutory financial audit?

A forensic audit is usually targeted at a specific suspicion and focuses on evidence and intent, whereas a statutory audit gives an opinion on the financial statements as a whole. Forensic audit is not an annual mandatory requirement and relies heavily on documentary evidence.

  1. AA forensic audit relies only on sampling to give reasonable assurance on all financial statements
  2. BA forensic audit is usually targeted at a specific suspicion and examines intent and evidence, while a statutory audit expresses an opinion on the financial statements as a wholeCorrect
  3. CA forensic audit is mandatory every year for all companies under company law
  4. DA forensic audit ignores documents and relies only on management representations

Explanation

Forensic audit is triggered by suspicion or allegation, focuses on proving or disproving fraud and on intent and evidence. Statutory audit gives an opinion on whether the financial statements as a whole show a true and fair view. It is not mandatory annually and does not rely only on representations or sampling.

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