Meaning
Examination of financial records specifically designed to produce evidence suitable for use in legal proceedings. Unlike a standard financial review, a forensic audit looks for patterns of misappropriation and unauthorized transfers that a founder might have moved. It governs the investigation of corporate misconduct and stops once the findings are presented to a governing body or the lead investigator concludes that no further evidence exists.
Investigation Procedure
Detailed analysis of bank statements and ledger entries identifies every movement of cash. When a forensic audit is commissioned, the auditors compare the documented authorizations against the actual outflows. Discrepancies here point directly to the person responsible for the loss.
A thorough search also uncovers the secondary accounts used to facilitate the transfer of funds.
Evidence Standard
Documentation of the findings must meet the requirements for admissibility in a court of law. Every spreadsheet and summary report is backed by the original source files and witness statements. This level of detail makes the report harder to challenge.
Reporting Requirement
Final delivery of the results includes a narrative of the events and a calculation of the total financial impact. The report avoids speculation and sticks to the facts revealed by the records. This document provides the basis for a settlement or a formal charge.
