FORENSIC AUDIT

Subject : Economics

Context : SEBI to appoint forensic auditors for listed firms.

Concept :

Markets regulator Sebi is looking to appoint auditors for conducting forensic audits of financial statements of listed companies as part of efforts to curb frauds.
In recent months, Sebi has ordered forensic audit of certain companies.

Forensic Audit

A forensic audit examines and evaluates a firm’s or individual’s financial records to derive evidence used in a court of law or legal proceeding.
Forensic auditing is a specialization within accounting, and most large accounting firms have a forensic auditing department.
Forensic audits cover a wide range of investigative activities. A forensic audit is often conducted to prosecute a party for fraud, embezzlement, or other financial crimes.
In the process of a forensic audit, the auditor may be called to serve as an expert witness during trial proceedings.
Forensic audits could also involve situations that do not include financial fraud, such as disputes related to bankruptcy filings, business closures, and divorces.