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Forensic audit in banks

Forensic audit in banks

Forensic audit is a process of conducting the audit of an organization or of an individual’s financial information, to produce the same as evidence in the court. The forensic auditor’s report may help to nail and prosecute the parties involved in fraud, embezzlement or for other types of financial misappropriations.

In banks, forensic audit signifies to an examination and evaluation of all type of decisions taken by the bank and also the basis on how decisions were taken. The audit  reviews the discretionary power of the person who has taken the decision on sanctioning the limit or allowed excess in excess of delegated authority,  whether the decision was taken in haste or after inordinate delay, whether excess granted over the sanctioned limit/drawing power was promptly reported to controlling office, whether the mistakes are repeated several times etc. The audit report similarly covers the credit decisions, investment decisions, and leakage of income, expenditure in excess of delegated power, deviation and violation of RBI guidelines etc. The audit report also mentions about all remedial steps initiated by the bank.

The scope of forensic audit includes identifying deficiencies in system and procedure by the bank and comparing the same with their peers in banking industries. The audit shall identify and report the illegalities in recruitment, promotions, and transfers, besides unlawful activities practiced by the bank in violation of rules and regulations which have ramification on the reputation of the bank, loss to the customers and threat to the economy.

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