Forensic Audit

 

What is Forensic Audit ?

                A forensic audit is an analysis and review of the financial records of a company or person to extract facts, which can be used in a court of law. Forensic auditing is a speciality in the accounting industry, and most major accounting firms have a department forensic auditing.

 

Why is Forensic Audit vital in Company or Institution?

 

1) To Against Criminals

2) To Prove the Truth

3) To Decrease Corruption

4)  to Prosecute a party for embezzlement, fraud or other financial claims in company or institution.

 

What are Kinds of Cases in Forensic Audit ?

 

Corruption

1) Bribery

                It is offering money or something to get things done or influence a situation in one’s favor is bribery. For instance, Nino bribed an employee of Dian company to provide certain data to aid Nino in preparing a tender offer to Dian.

 

2) Extortion

                It is the practice of benefiting through coercion.

For instance : Dian's Employee force Dian to give much money in order to undergo the big project as soon as possible .

 

3) Conflicts of interest

                When a fraudster uses her/his influence for personal gains detrimental to the company.

For instance if a manager allows and approves inaccurate expenses of an employee with whom she has personal relations. Even though the manager did not directly financially benefit from this approval, she is deemed likely to receive personal benefits after making such inappropriate approvals.

 

Asset misappropriation

Utilize circumstance to mold something is not true in order to gain advantage .

For instance Elsa Misappropriation of cash and mold fake invoices .

 

Financial Statement Fraud

Companies get into this type of fraud to try to show the company’s financial performance as better than what it actually is. The goal of presenting fraudulent numbers may be to improve liquidity, ensure top management continue receiving bonuses, or to deal with pressure for market performance.

 

One of The Big Case in 2020

01/ COVID-19 frauds infect society

                Perhaps, unsurprisingly, the most widespread and impactful frauds of this year were directly connected to the novel coronavirus. As the pandemic led to massive shutdowns in many nations, governments responded with a wide range of stimulus measures, including loans, enhanced unemployment benefits, direct payments to citizens and more.

 

                Some fraudsters were quick to exploit these government stimulus plans, while others used COVID-19 as a premise for a plethora of cyberfraud and consumer fraud schemes ranging from phishing attacks to sales of counterfeit personal protective equipment, testing kits and bogus cures.

 

                By the beginning of August, Reuters reported that U.S. losses related to coronavirus fraud had reached $100 million, with a large swath of cases originating in identity theft. Cases like these were especially common with fraudsters who used stolen personally identifiable information (PII), such as Social Security numbers (SSN), to file for unemployment benefits as more and more workers faced furloughs and desperately sought funds. (See U.S. cornonavirus fraud losses near $100 million as COVID scams double, by Steve Gorman, Reuters, Aug. 4, 2020.)

 

                Myra Walker, a New Jersey retail worker who was furloughed in March, found she’d been victimized by this type of scheme in the same way many others have discovered these frauds: when she applied for unemployment benefits.

 

                The U.S. Department of Labor informed her that someone had already created an account under her name and had used her SSN to receive payments starting in February. While the U.S. Federal Trade Commission (FTC) received more than 3.2 million reports of identity theft and other consumer frauds in 2019, these numbers are often severely understated, and will no doubt be much higher this year. (See Woman tries to file for unemployment but can’t. Someone else is getting benefits in her name. by Karin Price Mueller, NJ.com, May 12, 2020.)

 

                The same breed of identity theft remained prevalent after Congress passed a bailout package that included stimulus checks to an estimated 150 million eligible households. Scammers posing as government employees attempted to swindle taxpayers out of funds by asking for financial information, claiming it was necessary for the victim to receive their promised funds. (See Coronavirus stimulus check scams are out to swindle you out of $1,200: What you need to know, by Susan Tompor, Detroit Free Press, March 28, 2020.)

 

                Stolen PII has also been the catalyst for frauds that originate through contact tracing text message scams. Fraudsters devised schemes to masquerade as contract tracers, sending fake text messages, which contained links that installed malware onto their victims’ phones thus allowing the fraudsters to access banking information and SSNs. (See COVID-19 contact tracing text message scams, FTC.)

 

                While identity theft and types of financial fraud dominated the fallout of the pandemic, the coronavirus also exposed the medical and public health industries to a range of scams. In May, the city attorney of Los Angeles sued Wellness Matrix Group for selling coronavirus testing kits they claimed had been approved by the FDA and a “virucide” that purportedly killed the virus. City attorney Mike Feuer said the company “attached false government registration numbers to these products and fabricated phony scientific studies and white papers to substantiate their false claims.” (See LA Sues California Company, Alleging ‘Sophisticated’ COVID-19 Fraud, by Tom Dreisbach, May 27, 2020, NPR.)

 

                A majority of coronavirus-related scams feature fraudsters preying on those who are dependent on government aid or simply trying to keep themselves safe and healthy. However, some business owners committed another brand of coronavirus fraud to scam the U.S. government.

 

                After the Small Business Administration (SBA) rolled out the Payroll Protection Program, valued around $650 billion in loans to small businesses, a moving company owner in Florida received nearly $4 million in loans, which he’d declared would cover his company’s monthly payroll. However, an investigation revealed that his company’s monthly expenses averaged around $200,000. The man was arrested, and charged with fraud, after he was involved in a hit-and-run while driving a luxury Lamborghini, which he’d bought with money from his loan. (See He bought a Lamborghini after getting a $4 million PPP loan. Now he faces a fraud charge, by Jay Weaver, Miami Herald in Tampa Bay News.)

 

                Assistant U.S. Attorney Michael Berger noted that SBA loan scammers had become increasingly common because the agency was so overrun with applications that it had stopped checking the accuracy of applicants’ claims. The Florida man’s criminal affidavit recounts, “In the ordinary course of providing the loan guaranty, neither the SBA nor any other government agency checked IRS records to confirm that the applicant had paid the payroll taxes represented in the PPP applications."

 

                From benefits fraud, loan fraud, identity theft and non-delivery scams, to counterfeit products, telemedicine fraud, insurance fraud, contact tracing scams and supply-chain fraud, fraudsters exploited the global COVID-19 pandemic like no other crisis in recent memory.

 

What are Procedures for a Forensic Audit ?

1) Plan the investigation

Identification of problems, Talk to Clients, Mold Procedures

2) Collect evidence

3) Interview the suspect(s)