Page 347 - CA Final PARAM Digital Book.

Part 3- Forensic Audit

QNO Forensic Accountants Service – Areas Old Course-- (SM21, N22R)
628.500 TITANIUM CNO – FA.040
What are the areas where the services of forensic accountants/ auditors are generally required?
Answer The services rendered by the forensic accountants are in great demand in the following areas:

Criminal • Matters relating to financial implications the services of the forensic accountants
Investigation: are availed of. The report of the accountants is considered in preparing and
presentation as evidence.
Professional • Professional negligence cases are taken up by the forensic accountants. Non-
Negligence conformation to Generally Accepted Accounting Standards (GAAS) or
Cases : noncompliance to auditing practices or ethical codes of any profession, Forensic
Auditors are needed to measure the loss due to such professional negligence or
shortage in services.
Arbitration • Forensic accountants render arbitration and mediation services for the business
service: community. Their expertise in data collection and evidence presentation makes
them sought after in this specialized practice area.
Fraud • Forensic accountants render such services both when called upon to investigate
Investigation specific cases as well for a review of or for implementation of Internal Controls.
And Risk / Another area of significance is Risk Assessment and Risk Mitigation.
Control
Reviews:
Settlement of • Insurance companies engage forensic accountants to have an accurate
insurance assessment of claims to be settled.
claims:
• In case of policyholders seek the help of a forensic accountant when they need
to challenge the claim settlement as worked out by the insurance companies. A
forensic accountant handles the claims relating to consequential loss policy,
property loss due to various risks, fidelity insurance and other types of insurance
claims.
Dispute • Business firms engage forensic accountants to handle contract disputes,
settlement: construction claims, product liability claims, infringement of patent and trade
marks cases, liability arising from breach of contracts and so on.

QNO Forensic Accounting Vs Audit New Course-- (SM17, M18R, M18E, M22R,N22E)
629.000 TITANIUM CNO – FA.025 New Course—( SM23)
ABC Ltd. is a listed company having turnover of ₹ 50 crores & plans expansion by installation of new
machines at new building-having total additional project cost of ₹ 20 crore.
OR

Rupees (In crore) Purpose
10.0 - for Building
8.5 - for Machinery
1.5 - for Working Capital
20 crores

Project gets implemented in 2017-18 and one of the accountants points out to Managing Director that
something wrong has happened in the purchase of building material. On hearing this, the management is
planning to appoint Forensic Auditor. Advise management that how is a forensic accounting analysis is
different from an audit.
OR
Explain how a Forensic Audit differs from an Assurance Engagement
OR

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