Forensic audit and external audit are two important processes used to identify and investigate frauds and other financial irregularities in organizations. In India, both forensic audit and external audit are conducted by professional auditors who are certified and licensed to practice such services.

Forensic audit is an investigative audit which is conducted to detect frauds and other financial irregularities. It helps the auditor to analyze and understand the financial statements of an organization, by examining the evidence and related documents. The forensic audit is conducted using the techniques of auditing, accounting, computer forensics, and investigative techniques.

The primary objective of forensic audit is to obtain sufficient evidence to prove or disprove any allegations of fraud or financial mismanagement within an organization. It is used to uncover any breach of fiduciary duty, mishandling of funds or assets, or any other financial irregularities. Forensic audit is also conducted to provide evidence in court proceedings, in order to support or refute any allegations of unlawful acts.

External audit is a process that is conducted by an independent auditor to review the accuracy of the financial statements of an organization. It is the responsibility of the external auditor to provide an independent assurance of the accuracy and completeness of the financial statements of an organization. An external audit also helps the organization to understand and identify any financial irregularities or frauds.

In India, external audit is regulated by the Companies Act 2013 and is conducted by auditors approved by the Institute of Chartered Accountants of India. The external auditors are required to follow the Generally Accepted Auditing Standards (GAAS) while conducting the audit. The external audit helps in identifying any potential misstatements in the financial statements of the organization.

The main difference between forensic audit and external audit is that while forensic audit is conducted to detect frauds and financial irregularities, the external audit is conducted to verify the accuracy of the financial statements. Forensic audit requires more detailed and extensive investigation to detect any irregularities in the financial statements, while external audit is comparatively less detailed.

In conclusion, both forensic audit and external audit play important roles in ensuring the accuracy and integrity of the financial statements of an organization. While forensic audit is used to detect frauds and financial irregularities, the external audit is conducted to verify the accuracy of the financial statements. Both these processes are important for ensuring the financial health of an organization and for protecting the interests of the shareholders.