(a)‘Forensic auditing’

Generally 1 – ½ mark each point

Ideas

Definition
 • eg of Institut des Fraud Auditeurs de Fraude (IFA-IAF)
 • audit (examination) + forensic (legal)
 Application to fraud investigation
 • irregular nature of fraud
 • objective(s)
 • reactive vs proactive (preventative)

Max 5 marks

(b)Prior to commencing investigation

Generally 1 mark each matter/procedure

Ideas

Matters
 • Terms of reference (obtaining is a procedure)
 • Purpose/scope of investigation
 – possible understatement of inventory at 30/6
 – high material consumption in quarter to 30/6
 – to give credence to y/e amount (next quarter to 30/9)
 • Scope of access to records relevant to the investigation (any restriction?)/Information to be supplied
 • Staffing – level/experience/number/availability/other client commitments
 • Degree of reliance to be placed on report

By whom? – insurer?
 • Timeframe – before next (= annual) physical count
 • Form of report required – Any caveats?

Procedures
 • Discuss assignment with directors – responsibilities etc
 • Obtain engagement letter (terms are a matter)
 • Agree investigative fee
 Note: two professional marks are included

Tutorial note: There is no maximum to be awarded for each of matters and procedures as answer -points about matters may be constructed as procedures (and vice versa). Marks should be awarded for either/or (not both).

Max 10 marks