What Is a Forensic Audit?

A forensic audit is the evaluation and examination of the financial records of a company or individual for use as evidence in a court of law. The forensic audit is usually carried out to prosecute the accused party for financial crimes such as embezzlement of funds, fraud and bribery.

Forensic auditors also conduct a forensic audit to determine financial negligence of the accused party and to estimate the amount of child or spousal support an individual should pay. Forensic auditing falls under the field of accounting in a company. Many large accounting companies have their own in-house forensic auditing departments.

Some companies conduct forensic auditing to strengthen their business practices, maintain a good public image, impress shareholders and maintain their customer base through accountability. A judge can order an external auditing firm to conduct forensic auditing on a particular company if the report presented before the court of law by the internal auditing department of the company is fraudulent or questionable.

Forensic auditors study criminology and accounting to track expenditures of a particular company or individual and to check for discrepancies in the provided reports of expenditures or income. If they find inaccuracies in the provided report, forensic auditors investigate the reason for the inaccuracies, and submit their findings to the concerned parties.