Investigation Audit

Whenever any unusual or fraudulent activity takes place in a company, there is a need for an investigation into the matter. This kind of examination is known as investigation audit. It is aimed at detecting, tracking, quantifying and preventing fraud and money laundering in a company. An investigation audit requires a detailed examination of the financial records of a company to identify any suspicious activities or financial irregularities. It is also used to determine a suspect based on a piece of legal evidence and provide suggestions to prevent such frauds in the future.

The main difference between an audit and an investigation audit lies in its purpose. While a financial audit is conducted to ascertain whether the financial records of the company portray and true and fair value of the company, an investigation audit is carried out to address an issue defined by the client.

Fraud Detection Methods

Here are some common investigation methods that are used to test suspected discrepancies in the operations of a company:

•   Journal Entries

Typically, the chances of fraud are higher where the volume of transactions is higher, and there are not many automated controls in existence to keep a check. Alternatively, the internal controls are very weak to be easily manipulated without notice. This is the reason, a company’s journal entries become the first targets of any investigation auditor to look for any signs of manipulation. They understand the internal procedures and also call for supporting documents that can validate each journal entry.

•   Brainstorming Sessions

In a brainstorming session, the partner in charge of the audit holds a meeting with the company officials to discuss how fraud can be committed and what are the weak areas to govern. They discuss other frauds in similar organisations in the past and help identify the company's risk factors to learn from it and make their internal controls stronger.

•   Accounting Estimates

The most likely place to commit a fraud is accounting estimates. As they are subjective, they can be easily manipulated for one's gain and create a better financial image of the company. An auditor is required to study the accounting estimates of the previous years and ascertain if there is any change in the methodology in the current year. If there is any change observed, they should dig deeper and try to find out the cause with validating evidence. The directionalities of the estimates should also be checked as a whole.

Advantages of an Investigation Audit Report

• An investigation audit report can help a company in identifying internal frauds and eliminating them.
• It can lead to stronger internal control checks and strengthening the overall control mechanism of a company.
• It can help a company retain its reputation by saving it from long-term damage by fraud.
• Any factual information obtained during the course of fraud investigation audit can be used in the court of law.
• Usually, an investigative auditor who is also known as a forensic auditor, can present your case in the court of law and provide the necessary litigation support to your company against frauds.

What our Services Include

Musthafa Abdul Hameed Auditing of Accounts provide the following investigative auditing services:

• A detailed examination of the operation procedures and suspected financial records of a company.
• Conducting investigative review for assistance in fraud prevention.
• Carrying out exposure surveys to identify cases of frauds and embezzlements.
• Offering expert opinions regarding embezzlements and frauds.
• Developing and implementing an anti-fraud plan.
• Checking the existing controls and implementing high-quality enforcement mechanisms.
• Preparing financial and accounting investigations.
• Performing special tests to ascertain the authenticity and dependability of information security and information systems.
• Performing taxation and accounting due diligence to expose any probably risks involved in business activities, mergers and acquisitions and other such investments.
• Preparation of a report listing down all the investigation audit findings.

Musthafa Abdul Hameed Auditing of Accounts is a reputed CA firm providing independent investigative auditing services and helping our clients with analysing internal controls and processes to identify suspected fraud. We have experienced investigative auditors who specialise in the investigation of audits of companies, big and small alike.

If you need our investigation audit services, you can get in touch with us. We would be happy to partner with you.