Forensic Accounting & Audits

A forensic audit, also known as a forensic examination, is described as “the study of financial documents to detect any illicit financial behaviour.” The definition of forensic as “belonging to, utilised in, or fit for courts of justice or public dialogue.” Essentially, a forensic audit, or forensic examination, involves a thorough and specific investigation of financial records in order to confirm, or refute, unlawful financial dealings.

It is important to be aware that a forensic audit and forensic accounting uses different investigation tactics when compared to a financial audit. The main purpose of a forensic audit is to collect evidence for use in a civil or criminal court of law.

There are several forms of forensic accounting investigations that can be undertaken. The type of forensic audit that is required will vary depending on the circumstances of each individual situation.

Some of the most common types of forensic audits have been detailed below.

Seek Expert Forensic Accounting & Audit Advice

Unlawful financial dealings can have significant and wide reaching impact on both a business and personal level. It is crucial to seek expert advice as soon you become aware of potential unlawful activity.

At The Quinn Group, our team can provide expert forensic accounting & audit advice and services that are tailored to your unique situation. We are forensic accounting & audit specialists. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment. We look forward to speaking with you.

Vendor Fraud

Also known as payment fraud, which is the act of producing or redirecting funds fraudulently. A vendor fraud can be performed by someone within the business, such as an employee, or by someone outside the organisation, such as a supplier. Vendor fraud schemes are classified into two types: those performed by vendors acting alone and those involving collection between vendors and personnel of the deceived firm. In basic words, an employee creates bogus vendors and submits bills from the “vendor” to their company for payment. The following are examples of vendor fraud schemes:

• Overbilling occurs when a vendor submits inflated bills for their goods and services. In rare circumstances, the invoice may represent costs for more products than the client has received.
• Bid rigging occurs when a vendor and workers work together to steer the organisation’s procurement of products and services to a bidder proposing a high price.
• Price fixing is an agreement among rivals to set the same price of products or services by either defining a price range mutually or considering it at a minimum price.
• Kickbacks – Employees take diverted payments from vendors to facilitate fraud.

Bankruptcy Fraud

Bankruptcy is a legal procedure that allows persons or other entities that are unable to repay their creditors to seek relief from part or all of their obligations. 

Bankruptcy fraud is classified as a white-collar crime. Common criminal offences under bankruptcy legislation include asset concealment, document concealment or destruction, conflicts of interest, misleading statements, and fraudulent claims. The term “bankruptcy fraud” should be separated from “strategic bankruptcy.” All assets, whether or not the debtor believes they have a net worth, must be listed in the bankruptcy schedules. This is because, after the bankruptcy petition is filed, it is up to the creditors to determine whether a certain asset has worth.

Securities Fraud

Securities fraud, also known as share fraud or investment fraud, is a deceptive technique in the stock or commodity markets that convinces investors to make buy or sell decisions based on misleading information, which is a violation of securities legislation. Securities fraud includes embezzlement, stock manipulation, and financial report misrepresentation by a public firm.

Types of Securities Fraud include:

• Corporate fraud – Corporate fraud refers to criminal operations carried out by an individual or corporation in an untrustworthy or unethical manner.
• Dummy Firm – Fraudsters may build dummy corporations to provide the appearance of being an established company with a similar title.
• Online Fraud – According to Australian Securities and Investments Commission (ASIC) enforcement officers, criminals engage in “pump and dump” schemes in which misleading and/or fraudulent information is spread in chat rooms, forums, and internet boards.
• Insider Trading – insider trading is the buying or selling of a company’s shares, or other security, by “insiders” (being any person closely associated with the business dealings) who possess information that is not publicly available, and that information is reasonably expected to have a material effect on the price or value of the securities to be traded.

Financial Identity Theft

When someone utilises another person’s Personally Identifiable Information (PII) for financial benefit, this is referred to as financial identity theft. Financial identity theft is a crime in which more than just your money is at stake, such as your creditworthiness and reputation with potential lenders and employers.

• Insurance Fraud – Insurance fraud is unlawful and is committed by either the buyer or seller of an insurance contract. Insurance fraud by the issuer includes selling insurance from a non-existent business, failing to submit premiums, and churning policies to generate additional profits.
• Debt Default – A debt default occurs when a borrower fails to pay his or her loan on schedule. The time it takes for a default to occur varies according to the terms agreed upon by the creditor and the borrower. Some loans default after one missed payment, while others default after three or more missed payments. Serious consequences, such as a negative credit rating, can occur in such an incident.

Employee Fraud

Employee fraud refers to thefts and embezzlements committed while employed. Employee fraud occurs when a person commits fraud against the firm or organisation for which they work.

Payment fraud, procurement fraud, travel fraud, personnel management, asset and information exploitation, and receipt fraud are all examples of employee fraud. Asset theft, bribery and corruption, and financial statement fraud are the three primary forms of fraud. More than one form of fraud is found in many employee-perpetrated fraud schemes. Money theft, inventory theft, payroll fraud, or service theft are all examples of asset misappropriation. Bribery and corruption are the second most common types of fraud schemes. Kickbacks, shell business scams, payments to influence decision-making, contract manipulation, or the replacement of inferior products are examples of bribery and corruption. Financial statement fraud is the least prevalent sort of employee fraud, yet it is by far the most expensive. The manipulation of financial statements to generate financial possibilities for an individual or company is the focus of this sort of fraud. Consider stock price manipulation, higher year-end bonuses, better loan conditions, or other indirect gains from financial statement falsification.

Expert Forensic Accounting & Audit Advice

At The Quinn Group, our team can provide expert forensic accounting & audit advice and services that are tailored to your unique situation. We are forensic accounting & audit specialists. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment. We look forward to speaking with you.