A forensic audit is a fundamentally different exercise from your annual statutory audit — investigative rather than routine, and typically triggered by suspicion rather than a fixed calendar date.
Legal Basis
Under Section 117 of the Companies Act, 2063, the Office of the Company Registrar or a court can order a special/forensic audit of a company where there are allegations of fraud, mismanagement, or financial irregularities.
Common Triggers
- Shareholder disputes involving allegations of fund diversion
- Sudden, unexplained financial deterioration flagged during a routine audit
- Whistleblower complaints about specific transactions
- Lender or investor due diligence uncovering inconsistencies
How It Differs From Statutory Audit
Statutory audit gives a general opinion on whether financial statements are fairly presented. Forensic audit digs into specific transactions or patterns — tracing fund flows, examining related-party dealings, and often producing findings usable as evidence in legal proceedings.
Who Conducts It
Typically a specialized team, often including forensic accounting specialists working alongside ICAN-licensed Chartered Accountants, given the investigative and sometimes legal nature of the findings.
Facing a situation that may call for a forensic review? Company Sathi can advise on scope and next steps.
