Forensic Audit Services: What You Need to Know
By
Forensic audit services are a
specialized form of auditing that involves the examination and analysis of
financial records and transactions to detect and prevent fraud, corruption, or
other irregularities. Forensic audit services are often required by law
enforcement agencies, courts, regulators, or stakeholders who suspect or have
evidence of wrongdoing.
Forensic audits are different from regular audits, which are mainly
focused on verifying the accuracy and completeness of financial statements and
ensuring compliance with accounting standards and regulations. Forensic audits
are more investigative and analytical, and they use various techniques and
tools to identify and quantify the nature, extent, and impact of fraud or
misconduct.
If you are looking for forensic audit services in the UAE, you
need to hire qualified and experienced UAE
forensic auditors who can conduct a thorough and objective analysis of your
financial situation and provide you with reliable and credible evidence. Farahat & Co. is
a leading firm of forensic audit services in the UAE, with a team of certified
forensic auditors who have extensive knowledge and expertise in various fields
and industries. Whether you are facing a legal dispute, a regulatory
inquiry, or a potential fraud, you can trust Farahat & Co. to provide you
with high-quality forensic audit services that meet your needs and
expectations.
What is a Forensic
Audit?
A forensic audit is an
examination of financial records to identify and prevent financial
irregularities, such as fraud, embezzlement, corruption, or asset
misappropriation. Chartered accountants and auditors in the UAE perform
forensic audits to collect evidence that can be used in legal proceedings or
dispute resolutions.
Forensic auditors are experts in
detecting and investigating financial fraud. They use various methods and
techniques to analyze financial records, trace money transactions, reconstruct
deals, and evaluate the fraud impact. If you or your company are victims or
suspects of financial crimes, you may need a forensic audit. A forensic audit
can help you prove or disprove the allegations, recover your losses, and deter
future frauds. Importance of Forensic
Audit A forensic audit is an important
process that helps to detect and prevent fraud, corruption, and other financial
crimes. It examines the financial records of a company or an individual to find
evidence that can be used in a court of law or a legal proceeding. It can also
help to restore public trust and confidence in the entity that is being
audited. Some of the reasons why a
forensic audit is important are: ●
It can uncover criminal behavior such as fraud,
embezzlement, bribery, extortion, asset misappropriation, and financial
statement fraud. ●
It can provide expert testimony and support for
prosecution or defense in legal cases. ●
It can help to recover losses and damages caused
by fraud or other financial crimes. ●
It can help to improve corporate governance and
risk management practices by identifying weaknesses and vulnerabilities in
internal controls. ●
It can help to prevent future frauds by
implementing corrective measures and recommendations based on the findings of
the audit. Forensic audits are conducted by
specialized accountants who have training and experience in forensic accounting
techniques and legal issues. They require careful planning, collection of
evidence, analysis of data, writing of reports, and presentation of findings.
They are often used when there is a suspicion or allegation of fraud or other
financial crimes involving a company or an individual. The benefit of
conducting Forensic Audit Conducting forensic audit can
provide various benefits to the entity, such as: ●
Detecting
and preventing fraud and corruption: Forensic audit can help the entity to
identify and expose any fraud or corruption that may have occurred or may be
occurring within or outside the entity, and to prevent or reduce the recurrence
of fraud or corruption in the future. ●
Recovering
and minimizing losses and damages: Forensic audit can help the entity to
quantify and recover the losses and damages caused by fraud or corruption, and
to minimize the impact and consequences of fraud or corruption on the entity’s
financial position or performance. ●
Enhancing
governance, compliance, and transparency: Forensic audit can help the
entity to improve its governance, compliance, and transparency, by ensuring
that the entity’s financial records and transactions are accurate and complete,
and that the entity’s decisions and actions are in accordance with the
applicable laws, regulations, policies, and standards. ●
Protecting
and strengthening reputation and trust: Forensic audit can help the entity
to protect and strengthen its reputation and trust, by demonstrating the
entity’s commitment and capability to prevent, detect, and resolve fraud and
corruption issues, and by providing the entity’s stakeholders with a clear and
reliable picture of the entity’s situation. Dubai Islamic Bank
Dh1.8b Fraud Case: A Forensic Audit Example Background A group of seven suspects
embezzled Dh1.8 billion from Dubai Islamic Bank (DIB) over the period 2004-2007
using fake documents and transactions. The Public Prosecution has referred this
case, which involves the largest amount of financial irregularities and is the
third instance of corruption, to the Dubai Court of First Instance. The
suspects included five businessmen and two former DIB executives, who were
charged with various crimes such as swindling, forgery and bribery. Forensic audit ●
A forensic audit was conducted by a team of
experts to investigate the allegations and provide evidence for the
prosecution. ●
The forensic audit team examined the bank’s
records, transactions, documents, and interviewed key witnesses. ●
The forensic audit team found evidence of
irregularities, discrepancies, and money laundering activities by the suspects. Outcome ●
In 2011, six people were convicted and sentenced
to ten years each in prison. They were also ordered to repay Dh1.8 billion to
DIB. ●
Two former DIB executives were also fined Dh7.2
million and ordered to repay DIB the same amount. ●
A British businessman was acquitted due to lack
of evidence. Difference between
Forensic Audit and Regular Audit Regular Audit Focuses
on identifying and detecting financial fraud and irregularities Focuses
on evaluating a company’s financial statements and ensuring compliance Conducted
when there is a sign of fraudulence or any investigation or illegal
activities Conducted
annually or when a company requires it Provides
accurate data about certain or fraudulent activities in a department Provides
general information about a company’s activity Involves
in-depth knowledge of the legal framework and experience in both internal and
external auditing Involves
basic knowledge of accounting standards and principles Provides
evidence for legal proceedings or disputes involving financial matters Provides
assurance for investors, creditors, lenders, and regulators Forensic Audit Services
in UAE UAE is one of the leading
financial and business hubs in the world, and it attracts a lot of investors,
entrepreneurs, and corporations from various sectors and industries. However,
with the rapid growth and development of the economy, there is also an increased
risk of fraud and corruption, which can undermine the reputation and
performance of the entities involved, and cause significant losses and damages
to the stakeholders. Therefore, forensic audit
services in UAE are essential and in high demand, as they can help the entities
to prevent, detect, and resolve fraud and corruption issues, and to enhance
their governance, compliance, and transparency. Some of the common types of fraud
and corruption that forensic audit services in UAE can address are: ●
Asset
misappropriation: This involves the theft or misuse of the entity’s assets,
such as cash, inventory, equipment, etc., by the employees, managers, or third
parties. Examples of asset misappropriation are skimming, cash larceny,
fraudulent disbursements, inventory theft, etc. ●
Financial
statement fraud: This involves the manipulation or falsification of the
entity’s financial statements, such as income statement, balance sheet, cash
flow statement, etc., to deceive the stakeholders or to obtain undue benefits.
Examples of financial statement fraud are revenue recognition fraud, expense
recognition fraud, asset valuation fraud, etc. ●
Corruption:
This involves the abuse of power or position by the employees, managers, or
third parties, to influence or compromise the entity’s decisions or actions, in
exchange for personal gains or favors. Examples of corruption are bribery,
kickbacks, extortion, conflict of interest, etc. Process for conducting
a Forensic Audit The process for conducting a
forensic audit varies depending on the nature, scope, and objectives of the
forensic audit service. However, a general process for conducting a forensic
audit can be summarized as follows: Step Description Planning The first step is to plan the
audit investigation and define the objectives, scope, methodology, and
timeline of the project. The auditor should also identify the key
stakeholders, risks, and challenges that may affect the audit process. Documentation The next step is to collect and
review all the relevant documents and records related to the case, such as
contracts, invoices, receipts, bank statements, emails, etc. The auditor
should also verify the authenticity and integrity of these documents and
records. Interviewing The third step is to interview
all the parties involved in or affected by the case, such as employees,
managers, customers, suppliers, auditors, regulators, etc. The auditor should
use various techniques such as direct questioning, indirect questioning, leading
questions, closed-ended questions, open-ended questions, etc. to elicit
information from them. Analysis The fourth step is to analyze
all the information collected from the documentation and interviewing sources
using various tools and methods such as ratio analysis, trend analysis,
variance analysis, cross-checking analysis, etc. The auditor should also look
for any red flags or indicators of fraud or irregularity in the data. Reporting The final step is to prepare
and present a comprehensive report that summarizes the findings and
conclusions of the audit investigation. The report should include: ●
an executive summary that highlights the main
points of the report; ●
an introduction that provides background
information on the case; ●
a body that describes the methodology used for
the audit; ●
a conclusion that states whether there was
evidence of fraud or not; ●
recommendations that suggest corrective
actions or preventive measures; ●
appendices that contain supporting documents
or evidence; references that cite sources used for research; etc. Why Choose Farahat
& Co. as Your UAE Forensic Auditors? Farahat & Co. offers
high-quality forensic audit services in UAE. Our forensic auditors are
well-qualified and experienced in assisting clients with various scenarios,
such as: ●
Investigating and resolving suspected fraud,
embezzlement, or financial mismanagement within an organization. ●
Providing independent and objective financial
analysis for litigation or arbitration purposes. ●
Implementing and monitoring effective internal
controls and compliance measures to prevent or detect fraud in business
operations. ●
Verifying and validating the accuracy and
completeness of financial statements, contracts, or transactions. Our forensic audit
services include: Farahat & Co. is a leading
provider of forensic audit services in UAE, and we have a team of qualified and
experienced forensic auditors who can handle any type of forensic audit case,
regardless of the size, complexity, or industry. Our forensic audit services
include: ●
Financial
statements Audit: We can conduct a thorough and independent audit of the
entity’s financial statements, to verify their accuracy and completeness, and
to identify and report any fraud or misstatement that may affect the entity’s
financial position or performance. ●
Financial
Due Diligence Audit: We can conduct a comprehensive and objective audit of
the entity’s financial records and transactions, to evaluate the entity’s
financial health and viability, and to assess the risks and opportunities
involved in a merger, acquisition, or investment deal. ●
Fraud
Investigation and Prevention: We can conduct a detailed and systematic
investigation of the entity’s fraud or corruption allegations or suspicions, to
determine the facts and evidence of the case, and to quantify the losses and
damages caused by the fraud or corruption. We can also provide the entity with
recommendations and solutions to prevent or mitigate the recurrence of fraud or
corruption in the future. ●
Dispute
Resolution and Litigation Support: We can assist the entity in resolving or
settling any disputes or conflicts that may arise from fraud or corruption
issues, such as contract disputes, shareholder disputes, insurance claims, etc.
We can also provide the entity with expert testimony and evidence in case of
litigation or arbitration, to support the entity’s position and claims. Our Procedures for
Forensic Audit Services in UAE: Our forensic audit services in
UAE are based on the best practices and standards of the profession, and they
are tailored to meet the specific needs and expectations of our clients. Our
procedures for forensic audit services in UAE include: ●
Understanding
the client’s situation and requirements: We communicate and collaborate
with the client to understand the background and context of the case, and to
determine the scope and objectives of the forensic audit service. We also
discuss and agree on the terms and conditions of the engagement, such as the
fees, timeline, deliverables, etc. ●
Planning
and executing the forensic audit: We develop and implement a customized and
effective forensic audit plan, based on the scope and objectives of the
forensic audit service, and the available information and resources. We conduct
the forensic audit in a professional and ethical manner, and we adhere to the
relevant laws, regulations, and confidentiality agreements. ●
Reporting
and advising the client: We prepare and deliver a comprehensive and
objective forensic audit report that summarizes the findings, conclusions, and
recommendations of the forensic audit. We also provide the client with the
supporting documents and evidence, as well as the limitations and assumptions
of the forensic audit. We advise the
client on the best course of action and the possible outcomes of the forensic
audit, and we assist the client in implementing the recommendations and
solutions of the forensic audit.
