| In the last several years, the term forensic auditing | | | | gets its name from its association with a court of law. |
| came into usage. What really does it specifically | | | | It is carried out to accomplish an objective that entails |
| mean? The following article will discuss the importance | | | | a judicial process. |
| of this process. | | | | An example of this is the computation of asset values |
| First off, let us define accounting. Accounting is the | | | | in a divorce proceeding. Another is the assessment of |
| method of identifying, measuring, recording, and | | | | damages due to the negligence of an auditor. Still |
| communicating economic information regarding an | | | | another is fact-finding to see whether fraud had taken |
| entity or an organization. This procedure permits | | | | place, in what amount, and whether or not criminal |
| informed judgments by users of the information. On | | | | proceedings are to be set off. And lastly, the collection |
| the opposite side is forensic auditing which is a fairly | | | | of evidence in a criminal proceeding. Forensic |
| new procedure under the field of auditing. | | | | accounting focuses primarily on both the evidence of |
| Crime was the reason why forensic auditing was born, | | | | financial transactions and reporting as found within an |
| most specifically economic crime. Economic crime has | | | | accounting system. It is the legal framework that |
| affected every country and industry and has | | | | allows such evidence to be suitable to the purpose of |
| escalated in recent times. The number of cases of | | | | accounting. |
| fraud and corruption that are being reported has | | | | Forensic accountants are chartered accountants that |
| continued to grow. This is complicated by the | | | | specialize in these types of cases and when there is a |
| challenges faced by the criminal justice system. Plus | | | | need for such evidence. Their job is to distinguish and |
| the general absence of the necessary skills to gather | | | | interpret the evidences of both non-fraudulent and |
| the proper audit evidence that is vital to criminal | | | | fraudulent transactions in the books and records of an |
| investigations. | | | | accounting system. They also look out for the ensuing |
| According to information gathered from law | | | | effect upon the accounts, inventories, and |
| enforcement and criminal justice agencies, the success | | | | presentations. So, it is important that forensic |
| rate for convictions are not good because prosecuting | | | | accountants must first understand the regular |
| authorities lack skills and knowledge to provide | | | | accounting procedures and processes. In other words, |
| effective investigation and prosecution. This is where | | | | forensic accounting is a specialization. |
| forensic auditing comes in. Thus, forensic accounting | | | | |