Forensic Audit

By Neeraj Aarora FCMA, CEH, CCNA, CFCE, LLB, MBA (IT)

Traditional Auditing fails to unearth financial

irregularities;

Complex Trade Pattern with Transnational

Nature;

Corporate Frauds in India;

Enhanced Compliance Requirement;

Transparency Requirement;

Risk Management

Why Forensic Audit is Required

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Effective Governance

Compliance

Third Party Obligations

Litigation Support

Investigation

Scope of Forensic Audit

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Forensic Auditor as Expert Witness: Section 45 Evidence Act

Admissibility of Report: Admissible Evidence Computer Evidence

o Section 65B Evidence Act; o Section 2 A Bankers Book of Evidence Act.

Standard Procedures: Standards as Benchmark Acceptable Practices

Pre-Requisite for Forensic Audit

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Anvar P.V. Vs. P.K. Basheer and Others [MANU/SC/0834/2014]

The Supreme Court held:-o Original electronic record admissible as primary

evidence.

o Certificate U/S 65B Evidence Act shall ensure safeguard as to the source and the authenticity of the electronic evidence.

o If no certificate U/S 65B, no expert opinion is not admissible.

o If no certificate U/S 65B, no oral evidence can be resorted.

Section 65B – Admissibility of Electronic Records

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Skills of Forensic Auditor

Debit & Credit

Business Method

Bit & ByteAdmissibilit

y

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Multi-Disciplinary Specialization

Knowledge of Information System Audit like

Law, CISA etc.

Knowledge of Forensic Audit Process, CFE

Computer Forensic/Network/Server

Domain Knowledge/Exposure

CMA/CA/CS as Forensic Auditor

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Specific Methodology

Accounting & Industry Standard

Legal Framework

Information System Standard

Adherence to Standards:- Fyre Vs. United States Daubert Vs. Merrell Dow Pharmaceuticals

Methodology

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Define Objective Formulation of Strategy Discovery

Understanding Business Process Information System Analysis Collection of Documentary/Electronic Information

Analysis Finding the Gaps Interpretation of Business Transactions Systematic Review and appraisal of factors to meet

the objective of the audit Reporting

Process

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Forensic Audit Approach

Audit

Law & Standard

Information System

Business Method

Investigation Analysis

Reporting & Proving

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Complex Transactions/Process

Information System Audit/Cyber Forensic/Cloud

Computing.

Dynamically Changing Technology

Digital Evidence-Admissibility Issues

Cross Border Transactions

Humongous Data/Methods

Privacy Issues

Challenges of a Forensic Auditor

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In Demand

Excellent Rewards

Multinational Firms Vs Domestic Firms

Expert Witness

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Forensic Auditing as a Profession •Effec•Effec

Prevention of Money Laundering (PMLA)

Central Bureau of Investigation (CBI)

Enforcement Directorate (ED)

Serious Fraud investigating Organization (SFIO)

Economic Offences Wing (EOW)

SEBI/FMC/Banks/Financial Institutions

MNCs/Corporate Action

Courts

Application of Forensic Audit

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THANKYOU !

Neeraj AaroraAdvocate

E-mails: neeraj@hazenlegal.comWebsites: www.forensicveda.com, www.neerajaarora.com

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