Every business needs to understand the current scenario of the business and how it is functioning in the current business environment. If the business is ready for the upcoming business trends. To gather this in-depth knowledge of the company, the management conducts an audit of a company.
There are various types of Audits that a business can conduct. In this blog, we will be talking about the differences between Financial Audit and Forensic Audit.
What is Financial Audit?
A Financial Audit of a company is the overall objective evaluation of all the financial statements of the company. These financial statements will provide a general idea of the present condition of the company. Such an audit is generic and will not provide any specific information about the company.
Such financial audit of the company is conducted usually in an annual fashion. And in most cases, the results of the audit are made public and can be used by future shareholders and investors to make the relevant investment decisions.
What is a Forensic Audit?
A Forensic Audit is very similar to a financial audit but a major difference between the two is that such facts about the company are discovered about the company which can be presented in front of a court. This type of audit requires knowledge of the legal framework as well as deep experience in auditing and accounting practices.
This type of audit provides evidence about a specific department or operation of the company so that the court can decide if there is a problem in the business regarding embezzlement. The court may ask the auditor to serve as an expert and explain the findings to the court.
What is the Difference between Forensic Audit and Financial Audit?
To the untrained eye, both the Forensic Audit and the Financial Audit can look very similar, but there is a subtle difference between them. Here are some of the differences between a Forensic Audit and a Financial Audit:
- A Financial Audit is usually done on an annual basis but it can also be performed depending upon the requirement of the company. A forensic audit is done when there needs to be an investigation or there is an issue regarding any illegal activity happening in the company.
- A Financial Audit is very helpful to the investors of the company as it provides details about the present working of the company. A Forensic Audit is helpful to the management of the business to find out if any illegal activity is happening or not.
- Conducting the Financial Audit is a fairly routine function and should be performed by every business whereas a forensic audit should be conducted only when required by the business as it provides a piece of deeper and specific information about a department or operation of the business.
This is a very simple but important difference. Important enough to make a decision about the type of audit which is required by the business. The management of a company should take account of all its requirements and choose the type of audit accordingly. Both types of audits have their uses and are only required during specific instances. The management should do due diligence before choosing the type of audit required to be performed.
If you are looking for Financial Auditing Services or Forensic Auditing Services for your company then you can look into the services provided by JAXA Chartered Accountants. They provide trustworthy and expert auditing services which will assist in the growth and development of the business. The experts at JAXA will first understand the requirements of your business and accordingly provide the services.
JAXA also provides various other business services which will help in the growth of your business such as Accounting services, VAT and Tax related services, payroll and management consultancy services and many more. To know more about the services provided by JAXA Chartered Accountants in detail, feel free to Contact Us. We will be glad to assist you in your business journey.