Forensic Auditing

Forensic Auditing

A forensic audit is the most detailed type of audit work that can be done.

A forensic audit is performed when fraud is highly suspected.

The work can vary depending on whether the suspicion of fraud is limited to specific transactions or widespread.

Most condominium corporations are small enough, and well enough controlled, that any material fraud can be addressed in the normal audit process.

However, the corporation may decide to conduct a "forensic" if for example, the persons suspected of fraud had significant control over the finances.

In many cases, fraud is suspected, but cannot be proven. For example, management can award contracts to certain parties. If management is receiving "kickbacks" or other preferential treatment or compensation, this may be difficult to prove.

Usually, in a forensic audit, invoices and supporting documentation are traced nearly completely. Since condominiums are small, this can be done fairly easily.

Sometimes a corporation will ask for a "forensic" audit, not because of identifiable fraud, but because the accounting controls appear very weak, too weak for the comfort of the board and owners. In this case the audit report will simply state that all expenses were verified.