Singapore is a country where many businesses thrive. But just like any successful countries in the world, there are businesses in Singapore that are operating illegally or are not complying with the Singapore rules and regulations. There are some businesses that are operating legally in the interim but are forced to do something illegal to prevent their business from going bankrupt.
This is where Forensic Audit comes in. Forensic Audit is an examination and evaluation of a firm’s or a business owner’s financial operation for the purpose of using the information gathered as evidence in court. Forensic audits can be done internally with the help of an institution’s auditors and it can also be carried out by private companies in order to establish a complete view of an entity’s finances.
Forensic Audit vs. Financial Audit
Forensic audit is sometimes compared with a Financial Audit. This is because both forensic audit and financial audit involve careful examination of financial records. The only difference between the two is that forensic audits require analysis of financial transactions for use in court cases to while financial audit is basically undertaken to give regulators, investors, directors and managers reasonable assurance that an entity’s financial statements are accurate.
The report of a forensic auditor must be complete and well-documented as it needs to meet the standards of presentation before a court of law. The forensic auditor needs to supply the evidences relating to which case is being investigated, whether it is for fraud, embezzlement or conflict of interest. On the other hand, a financial audit report has statements and notes about the auditors’ findings and whether the financial statements of the company are fair and accurate.
When Is Forensic Audit Undertaken?
- To prosecute a party for fraud
- To investigate possible embezzlement
- To investigate any kinds of financial claims
- To determine tax liability
- To investigate a spouse during divorce proceedings
- To investigate allegations of bribery and extortions
- To investigate conflict of interest