A forensic audit is a comprehensive investigation of the financial accounts of a person on trial for criminal acts, typically performed by a forensic accountant. It can be used in court cases involving embezzlement, fraud, divorce, child custody, and even murder charges. The audit provides a general picture and detailed analysis of the accused party’s financial state and can be used to determine whether items of value owned by the accused are reasonable for their salary level. The trial of former US Senator Ted Stevens is an example of the use of forensic audit in a criminal court case. A forensic loan audit is also a common use of this type of audit.
A forensic audit is an investigation of the financial accounts of one or more persons on trial for criminal acts. This type of comprehensive examination is typically performed by a forensic accountant who is trained as a Certified Fraud Examiner (CFE), Certified Public Accountant (CPA), or Public Accountant. The prepared report is specifically designed for use in a court of law.
This process may also be known as forensic accounting. It is similar in nature to the type of audit performed by tax collection agencies, such as the Internal Revenue Service (IRS) in the United States. It provides both a general picture and a detailed analysis of the financial state of the accused party.
A forensic audit can be used in a variety of court cases. These often include issues of embezzlement, fraud, divorce, and child custody, and in some cases are used to motivate murder charges. The audit is usually requested by one or both attorneys arguing the court case. The auditor may be appointed by the judge hearing the case.
A forensic audit could be used, for example, if an elected official was charged with embezzlement of party funds and taking bribes while in office. The investigation would examine the accused individual’s bank statements, annual salary, stocks and bonds held, and items of value received or purchased during the time period in question.
The audit could provide a summary of the value of the holdings held by that individual, whether in the form of money, stocks and bonds, real estate, or private property. Your purpose would be to determine whether such items could reasonably be owned by someone at the established salary level for that position. If the value of an individual’s estate greatly exceeds reasonable expectations, a more detailed audit will most likely be performed.
The trial of former US Senator Ted Stevens from the state of Alaska is an example of the use of forensic audit in a criminal court case. Senator Stevens was charged with accepting bribes while in charge of a large oil company operating in the state he represented. Allegedly, these bribes were in the form of home improvements and large personal gifts made to him, which he could not reasonably have purchased at the time of his installation. The case was ultimately dismissed based on the manner in which prosecutors prosecuted trying to prove the illegality of such gifts.
Another common use of the forensic audit is the inspection of mortgage documents. This is known as a forensic loan audit. This type of service may be initiated by a homeowner who believes that he or she has been forced into a mortgage through dishonest means by a loan company. Forensic loan auditors and audit software are available for purchase online.
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