Your company’s assets and business dealings are essential to the success of your business. Suppose you have been a victim of fraud or you suspect that your company’s assets have not been handled correctly. In that case, you may complete a forensic audit to investigate and gather evidence for court proceedings.

When you are preparing for a forensic audit in Chicago, IL, the expert CPAs at Odoni Partners are here to help. Keep reading to find out a forensic audit is, why it is conducted, and how it works.

A forensic audit can seem overwhelming, but our team of Certified Fraud Examiners and CPAs will guide you through the process and keep you informed. Call us at (312) 440-0960 today to request a consultation.

What Is It?

A forensic audit is an examination and evaluation of a company’s financial records, collecting evidence that prosecutors can use in a court of law. It covers a wide range of investigative activities and requires auditing and analyzing procedures and expert knowledge of the legal framework.

Why Is It Conducted?

There are several reasons why a forensic audit might be conducted, including:

Asset Misappropriation

A forensic audit may detect misuse of assets, misappropriation of cash, or payments made to non-existing suppliers.

Corruption

A forensic auditor can detect evidence of corruption, including:

• Conflicts of Interest: This is when an employee of the company uses their influence to benefit personally, either directly or indirectly, in a way that is detrimental to the company.
• Extortion: This refers to a case where a company demands money from another company in return for something.
• Bribery: This involves offering money to influence a situation or benefit an individual.

Financial Statement Fraud

If a company falsifies its financial records to show that it is performing better than it is, that is a type of financial statement fraud. The company might do this to lessen the pressure for market performance, ensure top management keeps receiving bonuses or improve liquidity.

How Does It Work?

A forensic audit usually follows the same process as a regular financial audit, including a potential court appearance. A forensic auditor, a specialized accountant with forensic accounting training and investigative skills, conducts forensic audits in the following phases:

Planning of the Investigation

This involves determining what objectives the forensic audit aims to achieve. For example, some of the objectives might be:

• Identifying the type of fraud
• Determining when the fraud occurred and how it was concealed
• Identifying the perpetrators
• Quantifying the loss suffered
• Gathering evidence that is admissible in court

Collecting Evidence

The next step of a forensic audit is to collect evidence that reveals the fraud and its perpetrator in detail. It should also document how the fraud affected the parties involved.

A forensic auditor may collect evidence in a variety of ways, including:

• Comparing trends and data from different sources
• Obtaining, reviewing, and cross-referencing documents to confirm data and findings
• Auditing internal communications and procedures to identify potential loopholes

Reporting and Court Proceedings

The auditor will then write a report that includes:

• Their findings
• A summary of the evidence
• A clear, logical explanation of how the perpetrators carried out the fraud

The court will use this report as evidence, and the forensic auditor will usually testify to give a summary and details of the report.

Providing You with the Insight You Need

At Odoni Partners, we provide our clients with forensic accounting and litigation services that enable us to provide the highest level of insight into their financial status. We help our clients realize their personal and professional goals and assist with complex legal circumstances, such as money laundering analysis, fraud investigations, and criminal litigation support…

Call our Chicago, IL, office at (312) 440-0960 and rely on our experts for forensic accounting services and assistance with your forensic audit.