Reference no: EM13557844

Pains wick Ltd

1. Define a forensic audit and explain how the definition applies to a fraud investigation.

2. Compare the responsibilities of the auditor in respect of fraud when conducting a statutory audit and when conducting a forensic investigation.

3. Explain how the fundamental principles of the Code of Ethics and Conduct apply to forensic assignments.

Example of fraud

The purchase ledger clerk of Painswick Ltd has been channeling payments to suppliers in to his own bank account by altering bank account details of the relevant suppliers on the BACS masterfile. In order to disguise this activity the purchase ledger clerk has:

-Posted the relevant invoices to the purchase ledger twice. One entry has been made correctly to the relevant expense account whilst the other has been debited to a suspense account

-Matched and removed the duplicate invoices and payments before the monthly reconciliation of supplier accounts is performed.

Required

Based on the above example of a fraud identify the procedures which would have enabled the forensic auditor to identify this fraud and quantify the loss to the company.