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Forensic Accounting is an emerging field for professionals. It is somewhat different than other conventional accounting and auditing practices. Therefore, it becomes necessary to understand the differences between a normal audit and a forensic accounting.

A normal audit is designed to provide assurance that the financial statements of an organization are accurate and reliable. On the other hand, a forensic accounting is designed to uncover potential fraud or misappropriation of funds.

Unlike normal accounting which focuses on recording and analyzing financial transactions, forensic accountants are focused on detecting potential fraudulent activities such as money laundering, embezzlement, and other white collar crimes. Forensic accountants also work with attorneys to provide expert advice in civil litigation cases related to financial matters.


Forensic accounting is a specialized field of accounting that focuses on investigating and analyzing financial records to uncover fraud and other irregularities. It differs from traditional accounting in that it requires a higher level of precision and accuracy when analyzing financial data. Forensic accountants are required to have an in-depth knowledge of the legal system, as well as an understanding of how to identify potential criminal activity. Forensic accountants may also be called upon to provide expert testimony in court proceedings related to financial disputes.


Forensic accounting involves the investigation and analysis of financial data. It is used to uncover fraudulent activities, identify money laundering, and investigate other financial crimes. Forensic accountants are highly trained professionals who specialize in collecting and analyzing financial evidence to help solve complex cases.

In contrast, normal accounting is the practice of keeping and maintaining accurate records of a company's finances. This includes tracking income, expenses, assets, liabilities, taxes, investments, and more. Normal accountants are responsible for preparing financial statements for businesses as well as providing advice on how to best manage their finances.

Forensic accounting is an investigative audit process used to uncover financial fraud and other irregularities. It differs from traditional auditing in that it is more focused on finding evidence of criminal activity and other discrepancies in financial records. Forensic accountants use specialized techniques such as data analysis, document review, and interviews to identify potential issues.

They also have the ability to analyze financial information from a variety of sources, including electronic databases and public records. By combining their investigative skills with their expertise in accounting principles, forensic accountants can uncover evidence of fraud or other irregularities that may not be detected by traditional auditing methods.


A financial audit helps the investors and lenders to know the current financial position as well as the current operations of the firm, they can use such reports in order to make future investment decisions whereas a forensic audit enables to identify or detect any malpractices or fraudulent activities that may be carried out in the firm.

Moreover, a financial audit can be considered as a routine process that a firm must conduct at least once a year but a forensic audit must be conducted only when there is a need for it such as if there is any suspicion about any malpractices within a firm. Hence financial audit provides general information about the activities of a firm whereas a forensic audit provides specific and accurate information about the departments and other particular activities of the firm.

How to determine that you require Forensic Accounting rather than Normal Auditing?

An organization may need a forensic audit if: -

  • Suspicions of fraud or theft arise.
  • Account balances are not what they should be (positively or negatively).
  • Accounts that were thought to be in your entity’s name are not really owned by your entity.
  • Reconciliation procedures result in timing differences or unidentified differences, or they don’t reconcile at all.
  • Vendors that should have been paid have not been paid, and/or customers that should have paid have not.
  • Theft of personally identifiable information has occurred or business systems have been hacked.
  • Labor and materials have resulted in poor quality products that are not selling (or worse, are out of compliance with laws and regulations).
  • A whistleblower hotline identified issues such as assets stolen or other defalcations.

Forensic Accounting and Financial Audit both have different scope & objectives. So it is important to first understand the facts and circumstances and select the appropriate accordingly.

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