Overview of Forensic Accounting, Errors, Frauds and Irregularities

audit. 

Discuss investigative techniques that you could include in the plan in order to uncover the alleged fraud and embezzlement.  

 (i) Teeming and lading.

(ii) Ghost employees. 

(iii) Window dressing.

 The chief finance officer of Borabora Ltd., Eric Mambo, recommended Ujenzi. Ltd., a construction company for the contract to construct the warehouse. However, when the contract was signed, Ujenzi Ltd. was not authorised to conduct business. This is because the government had revoked Ujenzi Ltd.’s license indefinitely, based on recent bidding irregularities and failure to observe construction standards. Eric Mambo knew that Ujenzi Ltd.’s license had been revoked yet recommended the company because he was receiving a commission and had some beneficial interest in the company. 

 The cost of the warehouse was also overstated deliberately to pass some of the money back to Eric Mambo. Eric Mambo recommended an adjustment to the accounting records to make the extra payments appear like transaction fees payable to a consultancy company that he owns. 

 Advise the management of Borabora Ltd. on THREE illegal activities that may necessitate a forensic investigation in the company.

(i) Explain the term “forensic accountant”. 

(ii) Advise the directors on THREE expected roles of the forensic accountant in the case of Kiatu Ltd.

(i) Highlight six characteristics of audit investigations. 

(ii) Evaluate eight reasons why audit investigations might be conducted.

Explain six audit steps you would undertake to help you in arriving at an appropriate audit opinion.

(ii) Explain a situation in which forensic accounting might be applied.