RTI, Nagpur1 Day 3- Session III Fraud investigation and forensic audit

RTI, Nagpur2 Session Overview  Concept of forensic investigation and its relevance  Types of frauds

RTI, Nagpur3 Definition of investigation  Investigation involves inquiry into facts behind the books and accounts into technical, financial and economic position of the organization (Taylor & Perry)  Term ‘ forensic’ deals with the relation and application of financial facts to legal problems  Forensic investigator conducts an investigation  To establish facts in relation to acts or actions/situations that may constitute a legal significance

RTI, Nagpur4 Learning objective  Participants will understand the role of a fraud investigator as opposed to normal audit and learn to recognise different types of frauds in terms of their chief characteristics.

RTI, Nagpur5 Characteristics of forensic audit  Scope and objectives are normally narrow and selective.  Substantive or conclusive evidence, while this is persuasive for normal audit  No fact is accepted unless it is substantiated  Not bound by accounting conventions or other policies  No specific investigation procedure  All figures questioned unless proved.

RTI, Nagpur6 Procedures of investigation- Few examples  Ascertain level of authority and nature of duties of employees  Cast and vouching of cash book  Checking cash book against bank statements,  Examine original pay-in-slips at the bank with counterfoils  Irregular cash payments  Examine cancelled cheques  Verification of cash sales  Confirm bad debts written off  Vouch purchase invoices

RTI, Nagpur7 Types of frauds  Trojan Horse frauds  Disaster frauds  Achilles heel frauds  Corporate espionage  Technical fraud