Requirement (b) was for 12 marks and contained a short scenario describing a burglary that had occurred at the Retriever Group. The Group’s audit committee had asked the audit firm’s forensic accounting department to provide a forensic accounting service to determine the amount to be claimed on the Group’s insurance policy.

The requirement asked candidates to identify and explain the matters to be considered and steps to be taken in planning the forensic investigation, and for the procedures to be performed. Unfortunately answers to this requirement were overall unsatisfactory indicating that this is not a well understood part of the syllabus.

Some answers tended to include one or more of the following in relation to the first part of the requirement:

• A lengthy discussion of what a forensic investigation is, including long definitions, with no application to the scenario – this was not asked for. This tended to be based on rote learning and earned few, if any marks. 
• An assumption that management had already quantified the amount to be claimed, and that the forensic investigation would “audit” that amount – leading to mostly irrelevant answer points. 
• A discussion about fraud and the lack of integrity of management for “allowing” the fraud to take place- this was often accompanied by lengthy speculation about the control deficiencies that failed to prevent the burglary from happening. 
• A focus on whether adequate safeguards could be put in place to allow the audit firm’s forensic accounting department to perform the investigation – this is a valid consideration to an extent, but the question did clearly state that there was no ethical threat. 
• A discussion on the accounting treatment necessary for the stolen goods – again, not asked for.

In relation to the second part of the requirement, while some answers gave well described and relevant procedures to quantify the loss, many focussed exclusively on determining the volume of goods stolen and said nothing about the value of them.

Many suggested discussing the amount to be claimed with the insurance provider and comparing our figure with theirs, clearly not understanding the point of the forensic investigation being to provide the amount to be claimed in the first place.

On the plus side, most answers included suggestions that a reconciliation should be performed between the latest inventory count records and the amount of goods currently in the warehouse, though these were not often presented as procedures.

On the whole it was clear that many candidates were unprepared for a question requirement of this type, and that again it is apparent that a significant number of candidates rely on rote learnt knowledge and have difficulty to develop relevant answer points for a given scenario. Some candidates barely attempted this requirement, which for scripts achieving a mark that is a marginal fail is obviously a significant issue.