09-27-2009, 12:06 AM
Odyssee
Do you understand the difference between audit and investigation or audit and a due diligence evaluation? I hope you must have the required insight of the difference in generalized terms. Similar is the difference between the two you are inquiring.
In Pak most of insurance companies utilize the services of forensic accountants for the sake of having a reliable estimation of the high value insurance claims. You know in number of cases people destroy their useless stocks and assets deliberately and lodge substantial claims to insurance companies to take undue benefits. For this purpose they sometimes also destroy the records that can lead a straightforward estimation of the loss. In such circumstances, forensic accountants prove to be the most effective tool.
There can be so many other examples as well where forensic accounting finds significant relevance. Frauds in branch offices (like banks or multinational companies), embezzlement by employees, falsification of records by employees, undue utilization of powers, undue induction in public sector or by those who are working in fiduciary capacity, frauds by stock brokers and financial institutions with public, so forth and so on.
Forensic accounting is typically different from normal accounting since it is based upon a known or suspected act that has to be fully substantiated. What I understand unlike a normal assurance engagement, the scope of forensic audit or investigation is too much specific and concentrated and entails much larger amount of assurance. It is normally conducted on court's order or for proving a point in court even if it is not required by the court. However, it may also be conducted to safegaurd the interests whether or not the case goes to the court.
Forensic accounting includes forensic audits, forensic reviews, forensic investigations, etc. These all are in principle one and the same thing with thin conceptual boundries. For example in forensic audit you base your work on incomplete records, historical information, indirect information, market norms and standards, information and explanation that may be collected from the auditees or elsehwere etc. In forensic investigations you may have to base your work on finding out involved persons, related or supporting people, knowing the details of crime by enquiries, collecting evidences from outside sources like police, hospital reports (in some cases), lab reports, post mourtam reports, fire fighting people, records of other people that may have any link, interviews, visits, meetings, research, so forth and so on.
On conclusion of both the result comes in the shape of the exact information of crime or suspected act or fraud etc, the approach and methodoly used in such crime or fraud or suspected act, the people who planned and executed it, the required figures and data in the shape of information, reconciliation and analysis etc, and a presentable evidence that can make a reliable basis to the case for court or other settlement.
I hope you would have a bit of over view of the needed information.
I have conducted a lot of commercial and financial due diligence studies and investigations of very famous companies and institutions as team member or team leader in local teams or with consortia of foreign consultants like Atkins and a few others. However, unfortunately I have not so far done any forensic investigation. I hopw it will be a very interesting experience as well.
Regards,
Kamran.
Do you understand the difference between audit and investigation or audit and a due diligence evaluation? I hope you must have the required insight of the difference in generalized terms. Similar is the difference between the two you are inquiring.
In Pak most of insurance companies utilize the services of forensic accountants for the sake of having a reliable estimation of the high value insurance claims. You know in number of cases people destroy their useless stocks and assets deliberately and lodge substantial claims to insurance companies to take undue benefits. For this purpose they sometimes also destroy the records that can lead a straightforward estimation of the loss. In such circumstances, forensic accountants prove to be the most effective tool.
There can be so many other examples as well where forensic accounting finds significant relevance. Frauds in branch offices (like banks or multinational companies), embezzlement by employees, falsification of records by employees, undue utilization of powers, undue induction in public sector or by those who are working in fiduciary capacity, frauds by stock brokers and financial institutions with public, so forth and so on.
Forensic accounting is typically different from normal accounting since it is based upon a known or suspected act that has to be fully substantiated. What I understand unlike a normal assurance engagement, the scope of forensic audit or investigation is too much specific and concentrated and entails much larger amount of assurance. It is normally conducted on court's order or for proving a point in court even if it is not required by the court. However, it may also be conducted to safegaurd the interests whether or not the case goes to the court.
Forensic accounting includes forensic audits, forensic reviews, forensic investigations, etc. These all are in principle one and the same thing with thin conceptual boundries. For example in forensic audit you base your work on incomplete records, historical information, indirect information, market norms and standards, information and explanation that may be collected from the auditees or elsehwere etc. In forensic investigations you may have to base your work on finding out involved persons, related or supporting people, knowing the details of crime by enquiries, collecting evidences from outside sources like police, hospital reports (in some cases), lab reports, post mourtam reports, fire fighting people, records of other people that may have any link, interviews, visits, meetings, research, so forth and so on.
On conclusion of both the result comes in the shape of the exact information of crime or suspected act or fraud etc, the approach and methodoly used in such crime or fraud or suspected act, the people who planned and executed it, the required figures and data in the shape of information, reconciliation and analysis etc, and a presentable evidence that can make a reliable basis to the case for court or other settlement.
I hope you would have a bit of over view of the needed information.
I have conducted a lot of commercial and financial due diligence studies and investigations of very famous companies and institutions as team member or team leader in local teams or with consortia of foreign consultants like Atkins and a few others. However, unfortunately I have not so far done any forensic investigation. I hopw it will be a very interesting experience as well.
Regards,
Kamran.