Every Chartered Accountant can not be a forensic auditor

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Sarang Khatavkar
Sarang Khatavkar
Sarang is one of the first forensic accountants in the country who worked extensively with the law enforcement agencies across the country to solve the fraud problems. He is a Certified Anti Money Laundering Expert. He worked in the shipping industry before joining Riskpro and is instrumental in exposing the Trade based money laundering cases for the banking sector. He investigated numerous Ponzi Schemes for the Government of Maharashtra and presented in the court of laws as the expert witness to justify the findings of the reports.

I see a lot of Accounting Firms on various panels of forensic audits. They are always trying to make a good fortune out of the booming sector. Many of these are certified by the Institute of Chartered Accountants of India. But it is important to understand the paradigm shift in the way the non-traditional practice is conducted. Decades back, auditors used to offer all services under one roof. Even today, many of the firms have the same mindset.

While every Chartered Accountant possesses a strong foundation in accounting principles and practices, not all of them have the specialized skills and training required to become a forensic auditor. Forensic auditing is a specialized field that involves the application of accounting, investigative, and legal knowledge to uncover financial fraud, embezzlement, and other financial irregularities.

To become a forensic auditor, Chartered Accountants would need to acquire additional qualifications and expertise in forensic accounting. This typically involves pursuing advanced education, such as obtaining CFAP, CBFA, in forensic accounting or related fields. These programs provide in-depth knowledge of fraud examination techniques, forensic data analysis, legal aspects of forensic accounting, and investigative methodologies.

Furthermore, forensic auditors need to develop specific skills such as attention to detail, critical thinking, analytical skills, and the ability to follow a trail of financial transactions to identify irregularities or potential fraud. They also need to stay updated on the latest trends, technologies, and regulations in the field of forensic accounting.

The Reserve Bank of India has made forensic audits mandatory for large advances and restructuring of accounts.

In light of this, the RBI recently came up with the concept of creating a ‘forensic audit pool.’ It was reported that it wants banks to create a common pool of forensic audit firms so that they can pick one of them quickly whenever a high-value fraud needs to be investigated. 

The aim was to ensure that there wasn’t any waste of time in the garb of evaluating the eligibility criteria of forensic auditing firms.

It was seen that such a step could pave the way for Banks to investigate instances of high-value frauds is that banks can quickly take appropriate action, including fixing staff accountability, lodge complaints with law enforcement agencies, and invoke penal measures, such as debarring fraudulent borrowers from availing bank finance or raising funds from capital markets.

Forensic auditors/accountants do not differ from other financial accountants. However, they possess special skills to detect fraud and ways to document it. Their role goes beyond just looking into statements, that includes investigation, bringing out evidence, writing reports, understanding the legal scope of the evidence, and ways to prove it in court. Thus, a forensic auditor is in need of a little more professional skepticism and has to conduct critical assessments throughout the audit of all essential material, which is known as forensic thinking. It can be understood that the work of a forensic auditor is two-phased.

  • Investigation Services – At first the auditor begins with an investigation; looking into the accounts and statements, and identifying defects in them. It then moves on to find ways to deal with such defects, which is a reactionary function.
  • Litigation Services – It is entirely possible the fraud detected be resolved within the company itself. However, there are times when they need to be resolved through legal channels. During such situations, forensic auditors give litigation support to the advocates. Their advice and consultation about the legalities of commercial disputes are very essential. Moreover, they also provide research assistance by giving relevant documents and facts to support a legal claim, and also help decide the extent of damage that is required. They are also called up by the Court as an expert witness for further investigation.


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