ICAI intends and plans to come up with 8 new Forensic Accounting and Investigation Standards

Chartered accountants' vertex body ICAI intends to come out with eight latest forensic accounting and investigation standards, whereby forensic auditors shall be indispensable to issue an explicit and unequivocal report. Under the ambit of new accounting standards, auditors shall be required to follow stiff norms while conducting forensic audit, they said.

The latest forensic audit standards are likely to render many existing forensic audit reports indefensible, especially where lenders have used obscure and indecisive reports to classify borrower loan accounts as fraud.

The same are part of latest forensic accounting and investigation standard (FAIS) put forward by the institute's Digital Accounting and Assurance Board. The Institute of Chartered Accountants of India (ICAI) initially issued 13 FAIS.

As a part of the new accounting standards, forensic auditor shall be required to issue a brief and explicit report.

Further, such report is also required to be backed by dependable evidence and pertinent documents collected by the auditor in line with the requirements of FAIS to support its conclusions.

The report shall not exhibit an opinion or pass any judgement on the criminality or innocence.

FAIS categorically directs that the principles of?natural?justice needs to be adhered upon by establishing a dialogue of the observations with the subject party and their views shall be suitably incorporated in the report.

Presently, there are no specific standards or guidelines prescribed by any regulator or authority to monitor or regulate the function of forensic audit.

In the absence of such regulation any and every self-acclaimed forensic audit expert or firm that was pre-arranged by the lenders to administer forensic audit as per their own rules, policies and plan of actions present reports based on their own judgements.

In most of such cases, the reports erstwhile were indefinite, cryptic and devoid of dependable evidence. There was no review or appeal mechanism against any erroneous or wrong forensic audit findings, as well the same were not even discussed with the concerned party.

References: -

https://economictimes.indiatimes.com/industry/services/consultancy-/-audit/icai-to-come-out-with-eight-new-forensic-accounting-investigation-standards/articleshow/85274882.cms

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