Forensic Audit and Financial Audit | WBS Business Solutions
What’s the Difference?
The major distinction between forensic audit and financial audit is in the motive of the audit. Financial audits authenticate the soundness of a company’s financial statements, providing the creditors and investors with trust and conviction regarding the financial data. Forensic audits are directly related to a proceeding outlined by the auditing client. This could be a matter of sharp practice or disputes with a client or peddler. The auditor’s report has to meet the requirements for presentation in the courtroom.
- Company’s financial statements are carefully examined in financial audits.
- Forensic audit confirms the soundness of the accounting practices and the standards.
- Forensic accounting needs an understanding of particular areas of accounting and investigation processes.
What is a Financial Audit?
The motive of a financial audit is one goal – to give a commitment that a business’s accounting records satisfy generally accepted accounting principles or GAAP. In order to achieve this, the auditor has to unassisted examine the company’s financial records and apply his best verdict to make the correct decision. An audit of the financials may be able to expose fraud or fabrication of the facts.
Auditors plan their tasks in a manner that allows them to concentrate on collecting the right authentic, reliable, from the horse’s mouth evidence to justify the report. To gather the data needed an auditor for financial audit who investigate documents and records. When appropriate, he will discuss his detections and concerns with the management of the target company.
What is a Forensic Audit?
Financial auditors verify certain data like bank balances, customer and vendor accounts with the appropriate third party. This is the only way to confirm the soundness of the accounting practices and the standards.
Forensic audits demand scrutiny of financial transactions as well as a collection of the data to use in court proceedings. The forensic auditor can look carefully into the financial systems of a company to evaluate the reliability, trustworthiness, precision, and potency of the internal systems for control. The evidence of a forensic accountant for court proceedings could be:
- Commercial litigation
- Business valuation
- Bankruptcy and
- Special Education of Forensic Accountants
A forensic accountant’s training starts with the certification of a public accountant. Beyond that, forensic accounting needs an understanding of particular areas of accounting and investigation processes. This includes legal procedures, court procedures as well as the aptitude to detect the signs of criminal activity. A forensic accountant needs to know more than only a deception. They should also know about the insurance claim, insider trading along with legal contract agreements.
The Institute of Certified Forensic Accountants and the American College of Forensic Examiners along with other associations offer the certification of a forensic accountant. Forensic Society of North America is a professional association for accounting.
Difference between forensic audit and financial audit?
1. A Financial Audit is generally conducted yearly , however, it is also possible to conduct it in accordance with the requirements of the business. Forensic audits are conducted in the event that there is an investigation, or there exists a problem with the illegal activities that are taking place within the business.
2. The Financial Audit is very helpful to shareholders of the company since it gives information about the current workings of the business. A Forensic Audit can help the company’s management to determine if illegal activities are taking place or not.
3. Conducting the Financial Audit is a fairly routine job that is required by every company, while a forensic audit is only requested by the business since it offers more specific and detailed information about the operation or department of the company. This is a basic, but crucial distinction. It is important enough to make an informed choice about the kind of audit that is needed by the company. The business’s management must take into consideration the requirements of its clients and select the appropriate audit method. Both kinds of audits are beneficial and are required only in specific circumstances. Management must exercise thorough research prior to deciding on the type of audit to be carried out.
If you’re looking for Financial Auditing Services or Forensic Auditing Services for your business then you should look into the services offered through WBS Chartered Accountants. We offer reliable and professional auditing services that aid in the development and growth of your business. The professionals in WBS will first be able to comprehend the business’s requirements and then provide the required services.
WBS also provides various other business services which will help in the growth of your business such as accounting services, VAT and Tax related services, payroll and management consultancy services, and many more. To know more about the services provided by WBS Chartered Accountants in detail, feel free to Contact Us. We feel proud to serve.