Forensic audit is a critical process in Indian perspective, as it is an important element of the legal system. It is conducted to investigate alleged financial irregularities and to uncover fraud and corruption. Forensic audit is an investigative audit which is conducted to detect and to investigate any sort of financial fraud or misappropriation. It also plays an important role in litigation, especially in civil and criminal cases. It is also commonly referred to as “fraud audit” or “special audit”. The forensic audit process utilizes investigative techniques and data analysis to uncover anomalies and assess the accuracy of financial records.

The need for forensic audit is heightened due to the complexity of frauds and the prevalence of frauds in Indian businesses. It is estimated that frauds in India cost the country around 5% of GDP annually. The objective of a forensic audit is to determine whether an organization is operating in compliance with applicable laws and regulations and to detect any fraud or misappropriation of funds. It is a very sensitive and specialized audit which requires the auditor to be highly qualified and experienced.

In India, forensic audits are conducted by auditors who are qualified and experienced in the field of forensic accounting. These experts are appointed to investigate and analyze financial statements, accounts, documents, and other financial information regarding a particular organisation or individual. Forensic auditors are independent and objective in their approach and they work with the utmost professionalism to provide accurate and non-biased results. 

The purpose of a forensic audit is to detect and investigate any fraudulent or illegal activities that occur in an organization or individual. It is different from a regular audit as it involves a detailed investigation into the financial records of an organization. The auditors use a variety of techniques such as analysis of financial documents and records, interviewing witnesses, and conducting research on the background and reputation of the organization or individual to uncover any possible discrepancies or irregularities in their financial statements.

Forensic audits are conducted to protect the financial interests of a company or individual, to identify any fraudulent or illegal activities that have occurred, and to uncover any potential financial losses. They also provide an independent opinion on the financial status of an organisation or individual. The primary objective of forensic audit in India is to detect fraud and irregularities in the financial records. Forensic auditors employ a variety of investigative techniques and data analysis to uncover anomalies and assess the accuracy of financial records. This includes the use of specialized software to detect financial irregularities, as well as deep dives into the financial data available.

Forensic auditors also provide assurance and consulting services to organizations to help them protect against fraud. This includes conducting risk assessments, developing anti-fraud policies and procedures, and providing advice and guidance on fraud prevention measures. Forensic auditors can also assist organizations in the recovery of funds. Forensic auditors review the financial statements and documents of the organization. They investigate the internal control systems, investigate and analyze financial transactions, review the accounting procedures and identify any discrepancies or errors in the financial statements and documents. They also review the internal controls and procedures of the organization and determine whether any fraud or misappropriation of funds has occurred.