Forensic audit is an examination and evaluation of firm’s or individual’s financial information for use as evidence in court. a forensic audit can be conducted in order to prosecute a party for fraud, embezzlement or other financial claims. Financial audit is an independent, objective evaluation of an organization’s financial reports and financial reporting processes.
The following are 5 differences between forensic audit and financial audit:
- Financial audit aim at giving an audit opinion on the financial statements while forensic audit aim at detecting material fraud and misstatements.
- Financial audit depend on examination of audit trail while forensic audit depends on examination of events and activities behind the documents
- Financial audit is conducted strictly according to standards guidelines and applicable legislation whereas no such restriction is placed on the scope of forensic audit
- Financial audit is usually statutory whereas forensic audit is on ad hoc basis
- The financial auditor reports to the shareholders of the entity in which he conduct the audit whereas forensic auditor report to the person who appointed him