GRC Perspective TIPs- Fraud Auditing and Forensic investigation

This is a GR? professional perspective on setting up integrity systems for better principle performance. People come to me with fraud audit reports seeking advise on appropriateness for use in prosecution. Most of these reports provides recommendations relating to systems, process and controls improvement and if prepared by CPA's contain limiting use clause. Theses two factors makes the reports not usable as evidence in prosecution.

Audit outcome is recommendations mainly for consumption by the governing bodies and management. If the audit relate to fraud, the objective of the audit is to detect fraud. If prosecution is needed, a professionally qualified forensic investigator can use fraud audit report recommendation as predication " of detected fraud". The investigator should take steps to procure admissible evidence for use by court to help judge determine culpability. Simply put- Audit report including fraud Audit report can be the input to kick start a forensic investigation.

As per audit professional practice standards, Audit including Fraud Audits tend to focus on risk and control following where failures are attributed to policy, process and systems.

However, Forensic investigations outcome is designed for use by court, follows appropriate legally fit approach to provide evidence if crime called fraud and or corruption was committed, committed by who, when, against which law or policy and quantify loss including financial loss. This information must be provided in form of admissible evidence.

Kindly note all investigation need to be based on predication ( reasonable basis to believe fraud is or may be occurring i.e. detection through fraud audits), else the investigation may be misconstrued as a witch-hunt. Forensic investigation initiated without basis may infringe of suspect rights or prove discriminative practices ultimately killing the case.