hello everyone welcome to this session and as you have already seen the thumbnail and you here this is a part

two Marathon for CMA final paper 17 cost and management audit and I am CMA Parvati your faculty for cost AIT as

many of you have already watched part one Marathon for paper 17 and are very much eagerly waiting for part two

Marathon I know that so here I am in front of you with with part two Marathon for paper 17 this part one and part two

Marathon are very much relevant and applicable for December 2024 attempt students so those students who are

giving your attempt in December 2024 can rely on this part one and part two Marathon completely and score the

desired marks in your examination that's for sure and before coming into part two introduction I want to say that any of

you students have not yet watched the part one marathon and directly skipping into part two Marathon do watch part one

marathon before coming into part two marathon before because in part one I have covered entire section A cost audit

which covers 60 marks in your question paper which is very very important section from your syllabus so do watch

part one marathon and then come to part two marathon and in part two Marathon what are the topics I have covered is

section B management audit section c internal control and internal audit and section D forensic audit and anti-money

laundering yes section B weightage is around 25 to 30 marks section c weightage is around 10 to 15 marks and

section D weightage is also around 10 to 15 marks so all these three sections have been covered in this part two

combinely part one and part two Marathon I have covered entire 100% syllabus of this paper 17 by just watching part one

and part two you can be able to easily score 80 plus marks in your examination I can give you guarantee for that now

that is regarding what topics I have covered in this particular marathon and coming to the next thing what sources I

have used in this Marathon I have used my color concept book and handwritten notes for your easy reference and how to

purchase this concept book and handwritten notes concept book will be available only as a hard copy no soft

copy will be provided for concept book we very sorry for that only hard copy will be provided for the color concept

book and for handr notes soft copy will be available for Workbook also soft copy is available all these three books are

available in our bcca app so you can go there and purchase it soft copy and uh soft copy of handwritten noes and

workbook is available as a download option so right after purchase you can download it and take use of it and

concept book hard copy will be uh in front of you within 3 to 4 days uh after your purchase so that is regarding the

sources or the books which I have used in this particular marathon and regarding upcoming

videos important questions video is going to come in the BCA YouTube channel and also mcq's video will also be there

in front of you within few days before your examination so combinely part one Marathon part two Marathon important

questions Marathon mcqs videos what else do you want just by looking into these four videos You'll easily able to

understand all the concepts with ease and be able to give your examination with so much confidence be confident and

yes what is the speciality of this Marathon both part one and part two Marathon I have covered entire 100% syab

syllabus covering all the concepts in detail manner with simple language it is 100% English so everyone can watch this

I've used a simple language you can easily understand and most important concern for the students who are coming

for cost and management Auditors we have not yet started our preparation by just seeing this part one

and part two Marathon can we understand the concepts and give our examination you can yes even first time listeners or

you haven't started your preparation start enough not a problem see the part one Marathon see the part two marathon

and important questions video is yet to come mcq's video is going to come make use of all these four videos start your

preparation now even by watching these marathons if you're starting your preparation and giving a 100% in your

preparation you can be able to score 80 plus marks in your examination no one can stop you from that that's the

Assurance which I can give you yes even if you not yet started your preparation start it now by watching this marathons

you can easily understand the concepts and you can learn the syllabus which we have to tackle the exam question paper

so yes that's regarding the entire Marathon regarding information and coming to the class class ES recorded

classes for June 2025 attempt are also available and in this recorded class it is 100% English it is applicable for

June 2025 attempt entire 100% syllabus is covered and this course is inclusive of books you will get both concept book

workbook and also my handwritten notes if you're purchasing these recorded classes and yes clear understanding of

Concepts in detailed manner with very much slowly i' I've explained each and every concept by taking time very much

slowly you'll able to understand it very easily I have covered IC material past time mapers and also mcqs have been

covered in these videos so yes regarding these recorded classes in detail video will also be released regarding how much

time and uh what are the classes how much parts are there for the classes regarding the entire details of the

recorded classes will be uploaded in a separate video you can see that and purchase the recorded classes also so

yes this is a little bit introduction regarding the marathon classes and books so and At Last I want to thank you

everyone students who have watched part one marathon and you have liked the part one Marathon so here I am in front of

you with the part two Marathon make use of both part one and part two marathon and do learn your concepts with very

much easy so yes that's regarding introduction of marathon paper 17 cost and management audit after this

introduction you'll directly skip into the marathon classes I hope you you understand all the concepts if you have

any doubts with any of the concept please do ask your doubts in the comment section or in the telegram Channel

Channel I will be there to address those issues or the doubts I'll make you understand very much easily even if it

is through online mode don't worry even if it is through Chads or any other mode I will make sure that you will

understand your doubts so that's regarding the doubts Clarity also yes uh thank you so much take use

of it and all the best for your upcoming examination you will Dr I Believe In You Believe in Your

thank you bye yes so now we going to start with our section the forensic audit and

anti-money laundering this is our section D and in our section D we have two concepts or two units unit one is

forensic audit unit two is anti-money laundering now in this section D what we are going to see in forensic audit we

going to see what is forensic audit like what the meaning of forensic audit why we are going into forensic audit what is

the use of forensic audit we have many other audits like Financial audit cost audit internal audit statutory audit now

what is the difference between other Audits and forensic audit when we have all the audits in the company what is

the use of this uh or the speciality of going to forensic audit that we are going to see the difference between

other Audits and forensic audit and what is the reason for conducting a forensic audit in that particular particular

company if any company is undergoing any forensic audit what are the benefits that company will derive and at last who

can go go go on doing this forensic audit we have certified fraud examiners who can be certified fraud examiners

what is the role of them and what are the specialities of them what are the objective of them we are going to see

all that and then we are going to see regarding accountants like accountant Auditors they can also be a forensic

auditor so what are the uh these Concepts regarding to and we have a one important tool for conducting this

forensic audit which is called as fraud triangle what is the tool regarding as and how that fraud triangle is related

to this forensic audit regarding all Concepts we are going to go in detailed in this particular forensic audit and

coming to anti- money laundering what is anti-money laundering and what are the concepts regarding anti-money laundering

what is the steps or the process of this money laundering how we are going to uh oppose this money laundering to not to

happen in that particular entity or organization what kinds of money laundering we have and in this cost

audit we are going to see mainly how this money laundering is related to counter financing of terrorism how this

money laundering is related to terrorism activities how we have to take the necessity step steps to control this

money laundering and counter financing of terrorism those Concepts you are going to see in anti-money laundering

this is nothing but an overview of section D now we are going to start with forensic

audit coming to forensic audit what is forensic audit now we have Financial audit we have cost audit we have

statutory audit we have internal audit all these are nothing but statutory compliance es because company has to do

it as a statutory purpose or a legal requirement they are undergoing those financial audit or cost audit but

foreign sync audit is not a statutory compliance not a mandatory requirement which should be undergone by a company

but if company wants to know about anything what are those things we'll see now if company want to know about any

fraud which is being committed in that particular company crime which is happening in that particular company or

any asset misappropriation in that particular company then they can go for forensic auditing now forensic audit is

also examination of financial records and financial statements but the examination of financial statements and

financial accounts are also called as Financial auditing now what is the difference

between Financial audit and forensic audit both are nothing but examination of financial records and financial

statements but in both the cases will prepare a report at the end for financial audit we'll prepare a

financial report and for forensic audit we'll prepare a forensic audit report the financial audit report will be just

a statutory compliance will only be in that boat's report only but forensic audit report can be produced in the

court of law as a evidence so it is nothing but a proof which can be held the particular company for guilty of

that particular misconduct so that is the main difference or the main use of conducting a forensic audit if any

company is conducting a forensic audit and they're getting to know that there is a fraud in that particular company

that only report which is prepared can be put in the court of law and that particular company can be held guilty of

that particular fraud that is the main introduction of forensic audit I hope you have understood it now getting to

our concept one introduction regarding forensic audit so this is my handr notes you can

refer the handr notes for better understanding now forensic audit forensic audit is nothing but an

analysis and review of financial records of company or a person to extract facts which can be used in the court of law so

what these facts are regarding about to detect any illegal action happening in the company to if to know if there is

any manipulation in the books of accounts or to know if there is any siphoning of funds siphoning of funds

means misappropriation of funds misuse of company's funds for their own benefits or they are doing the theft of

funds they are using the funds for their own benefit that is nothing but as siphoning of funds so forensic audit is

nothing but having an analysis and review of financial records to know or to detect whether there are any illegal

actions or manipulation of books of accounts or sioning of funds these detection is prepared as a report which

can be used in court of law now forensic audit begins with suspicion and doubt what is the suspicion suspicion about

whether the company is involved in any fraud or not whether the assets are being used for company purpose or

personal benefits whether there is any fund theft or not to know about that we'll have a suspicion or doubt at the

beginning after after that it will ends with the performance of Investigation then we are we go on with the

investigation to find out what is fraud regarding to so that is the basic introduction regarding forensic

audit so that is what I have given in your introduction a forensic audit is an in-depth examination of individual or

organization Financial records to collect the evidence that can be used in the legal proceedings that is our first

point which I have given you as introduction now forensic audit can be done in two cases in case of financial

frauds in case of non-financial frauds what are the financial frauds Financial frauds are nothing but to know about

fraud to know whether there is any emusement emusement is misappropriation of funds without authorization if they

are taking any funds that are nothing but emusement which can be also called as theft of funds or money in the

company Financial crimes misstating or omitting the material information from the financial statements or not giving

any material information in the records in documents that are nothing but Financial crimes so if any of these

things happen that is nothing but financial fraud which is entirely related to money Finance purposes that

kind of fraud is called as financial fraud now coming to non-financial frauds in non-financial fraud cases also Bank

uh forensic audit can be commenced what are those cases if a company is undergoing into bankruptcy how the

bankruptcy is related to forensic audit now there is a bankruptcy for that particular case to know the reason for

that particular bankruptcy is any shareholder or any director or any management personel is involved in that

particular cases which led that particular company into bankruptcy whether the management has not given any

proper internal controls to know about that whether the management has not taken the decisions which benefited the

company they willfully took the decisions which led the company into bankruptcy so what is the main reason

behind this bankruptcy what are the if any assets has been taken by the management or not to know about all

these things forensic audit can be conducted now filing disputes if for example the company is undergoing into

any mergers or Acquisitions or take Tak over any company into their company or they are getting into any new businesses

there will be a dispute or in the court of law there will be some legal disputes which has to be taken in that cases also

to know whether this particular company can be merged with that particular company or not whether the both

businesses are aligning with the same intentions or not same objectives or not to know about that forensic audit can be

done closure of business in case of closure of business also forensic audit can be done to know what to know whether

there are any hidden Assets in that particular company when business is getting closed some shareholders or some

management can hold the money with themselves or hid or hide the assets of that particular company for their own

benefit whether there are any hidden assets to know about that forensic audit can be conducted after that that hidden

assets will come to the picture and they will be utilized to give the shareholders their own money to know

about that also forensic audit can be conducted and at last divorces divorces are not between husband and wives or

between persons but between the company and the management if management is having a conflict of interest between

the company and there if management objectives are not meeting with the company's objectives the management will

intentionally take the wrong decisions which can lead the company into falling down so to know about that also forensic

audit can be conducted so these are the two cases or two uh elements in which forensic audit can be conducted one is

financial fraud and non-financial fraud cases now difference between Financial audit and forensic audit as I've already

told you Financial audit is an examination for a statutory compliance now coming to forensic audit it is just

an investigation of financial records of the entity to D the evidence to support of a fraud and

that can be used in the court of law or legal proceedings so that is nothing but a difference between Financial audit and

a forensic audit so that is regarding our introduction I have told you regarding Financial crimes and various

legal disputes which is nothing but non-financial fraud cases the difference between forensic audit and regular audit

lies in the legal implications as forensic audit often involves in presenting evidence and Cod now coming

into common areas of forensic audit these are the common areas of forensic audit why this forensic audit can be

conducted in which areas this forensic audit can be conducted forensic audit can be conducted in mainly three areas

when there is a asset M appropriation in that particular company when there are instances of corruption when there are

financial statements fraud what are these we'll see now under these three areas forensic audit can be conducted or

forensic audit can be started in that particular company now what are the cases of asset Mass appropriation when

there is a cash theft in the business when using company's business for fraudulent payments companies funds are

using to make a illegal activities payments or doing any fraud payments in that case also forensic audit can be

done billing frauds which means a fictious supplier is there there is no supplier at all we are not getting or

receiving any raw materials from that particular supplier but in our books of accounts we have given an entry

regarding we have purchased certain materials from that particular supplier and we have made a payment also so what

we are doing we are taking the management is taking the cash from that particular business and showing the

entry for that particular cash as fictitious supplier as they are taking the raw materials from outside which is

nothing but misappropriation of funds now pay payroll frauds payroll frauds can also be done an employee is working

in our organization there is no employee who is actually working in our organization but that employees name is

recorded in our books of accounts and it is recorded as we have paid a salary for that particular employee that is nothing

but payroll frauds for a fictitious employee theft of inventory from a company when inventory or a main

particular asset in that particular company is become theft or misused by any management misuse of Assets in that

case also these all cases will be led to asset misappropriation which can lead to

forensic audit this is the first area where forensic audit can be commenced now second case instances of

corruption what are these corruption cases corruption can be of three kinds it can be conflict of interest it can be

extortion it can be prary what are these three cases of corruption these three are also

called as corruption how these are different from each other we'll see now conflict of interest conflict of

interest is nothing but when individual is making decisions which is against the decision of the company or which is

against the interest of that particular management they are doing that or they are taking the decision on their own

benefit for that personal interest they are taking that decision that is nothing but conflict of interest for example

there is is a manager person in that particular company or a key personal in that particular company who has to give

his opinion regarding a merger of one company with the other company for example this manager or key personal is

working in XY limited company and this companies want to take a merger with ABC limited company now for this merger the

opinion of this person is being asked by that particular company and this person is closely related to ABC limited

management he has a business relationship with them so what this person is doing even XYZ limited and ABC

limited are not in a common source of business even if they won't have any benefit with this merger this person is

saying that no when you both are merged into one business you'll have profits when he knows that this will lead to

losses he's telling that no it will be a profitable business you can go on with that this is done to deceive the person

but to get a personal benefit that is nothing but called as conflict of interest that can lead to

corruption extortion extortion is nothing but demanding money or favors through caution or threat so by

threatening someone if you are demanding them to give money to go on with any work that is called as extortion now

coming to bribery bribery is nothing called willfully giving money to any person to do that particular work so

they are asking that person to please do me this work and I'll offer you some kind of money or some kind of asset in

that particular place that is called as bribery so the are the three instances of corruption conflict of interest

extortion and prary now coming to financial statements fraud what are the cases of financial statements fraud

fraudulent financial reporting when financial reporting itself fraudulent fraud of material misstatements when

material things have to be recorded in that particular financial statements and they are willfully misstated many

material information is willfully omitted from that particular statement that can also be there deliberate

falsification or omission of any activities or any transactions or events for that from that particular statements

misapplication of standard standard itself willfully Mis applicated so all all these cases are called as financial

statements fraud so these are the three common areas where forensic audit can be comined so this is what I have given in

my material also common areas of forensic C corruption which can be conflict of interest bribery and

extortion and asset misappropriation can be due to cash theft fraudulent dispersement inventory fraud and misuse

of assets and when coming to financial statements fraud it can be Omission or Miss misapplication of accounting

standards so these are the common areas of conducting a forensic audit is it clear now getting into a concept three

which is called a scope of forensic audit what is the major scope of forensic audit as we have already

discussed forensic audit can be comined in two cases which in uh in case of financial frauds also forensic audit can

be commended which are fraud embezzlement other Financial crimes in non-financial cases also fraud can be

commenced like bankruptcy filings business closure disputes divorces where Financial assets are contested in all

these financial fraud cases and non-financial fraud cases forensic audit can be commenced which is nothing but a

scope of forensic audit that is our concept three now coming to concept four we have already discussed this

difference between Financial audit and forensic audit Financial audit is nothing but a statutory compliance

focuses on ensuring compliance with accounting regulations and provide assurance that financial statements are

accurate enough now forensic audit is nothing but focused on investigating Financial records to uncover the

evidence of fraud or mus conduct that can be presented in the court of law so that is the basic difference between

Financial audit and forens SEC audit now getting into concept five reasons for conducting forensic audit this also we

have already discussed what are the the reasons for conducting a forensic audit if they have suspected that there is any

financial fraud in that particular company they can go with forensic audit in case of legal proceedings like in

case of Court proceedings where Auditors have to serve as an expert witness in that case also they can go for forensic

auditing misappropriation of assets takes place in that particular business to uncover the assets which has

misappropriated they can go for forensic auditing business conflicts like merger acquis position or business closures

they can go for forensic auditing bankruptcy and insolvency when then compan is going into bankruptcy cases or

insolvency cases to uncover what are the hidden Assets in that particular company whether there are assets or funds which

are there in the management control to get that out also forensic audit can be conducted so

these are the reasons for conducting a forensic audit now getting into concept six investigation methodology of

forensic AIT what is the investigation methodology nothing but the process of doing this particular foric audit we

cannot see as a process but was the investigation steps which can be taken in the forensic audit we have around

five investigation steps what are those first step is nothing but accepting the investigation next is planning the

investigation third is nothing but Gathering the evidence fourth is reporting and fifth is Court proceedings

so what are all these we are going to see in detail accepting the investigation getting into our first

step accepting the investigation now for whom this forensic audit will be assigned to forensic audit will be

assigned to an independent form or group of investigators why this forensic audit have to give to an independent firm why

not to a already auditor who's working in our particular company because he already know about our company he can go

with forensic auditor no no because that particular forensic audit investigation should be free from any biased opinion

and the investigation should be in a truthful manner always the auditor who is coming to do a forensic auditor

should always suspect that there is a fraud in that particular company if already auditor who is working in our

company is coming and doing the audit he already has idea regarding our uh company so he'll not go on find any

fraud or crime he will just say that no everything is truthful enough so for that independent form or group of

investigators who doesn't know anything about our company should come for forensic

auditing what is the first step when also this forensic audit is given for an independent firm or group of

investigators what they have to do first they have to determine whether they have necessary tools skills and expertise to

go forward with that investigation first they have to check themselves whether they have that proper expertise or

skills to uncover that particular fraud or not whether they are being able to detect what is the error or crime which

is doing in that particular company or not those Auditors have to check themselves after that after determining

whether they have particular experties what they have to do they have to again train themselves to be more efficient in

conducting their work they have to do their own training and get more knowledge of fraud detection if they are

all satisfied with their expertise skills and they have done a proper training if they're satisfied enough

that yes we can go on with that particular forensic audit and we can detect what is the fraud happening in

that particular company they can go ahead and accept the investigation so this is the first investigation

methodology step which will be taking up which is called as access accepting the investigation now getting into second

step planning the investigation now they have gotten into the investigation process they have to plan the

investigation what are the planning steps first assertain the goal of audit being conducted first they have to know

what is the goal of that particular forensic audit why forensic audit is being conducted due to misappropriation

or due to corruption or due to financial statements fraud what they are going to search in the that particular forensic

audit what they are going to do uh find out in that particular forensic audit they have to fix that as their

particular goal and then determine procedures determine procedures to achieve it they have to maintain a

proper procedure so what will be the first step and what will be the last step entire procedure have to be taken

up use effective tools and techniques they have to use what are the effective tools and

techniques which can help them to uncover that particular forensic audit fraud now regarding this effective tool

we have one such tool in our syllabus which is called as fraud triangle and fraud risk what is nothing but a fraud

triangle and a fraud risk so a fraud triangle and a fraud risk is a tool which can be used in the

forensic AIT that explains regarding three interrelated Elements which are incentive altitude opportunity what are

the three elements why we are getting into these three elements and why this is called as a fraud triangle because

incentive is called as a pressure a motive that derives a person to commit fraud if he is in need of money or if he

want that particular money and he's in a financial problems in that case for wanting of that particular money he will

commit a fraud which is a pressure on that particular person which is a motive I need this money right now I want this

money if he's any person who is having a um addiction of gambling or any other drugs or something then he needs money

so to get that money what he'll do he can't go and ask his parents or something that I want to go for gambling

or I want some drugs to purchase he can't go so for that he want illegal money for that he'll commit a fraud and

he will get that money so incentive is nothing but a pleasure or motive to derive that money and coming to attitude

attitude is a realization and ability to rationalize fraudulent Behavior a attitude of that person who's committing

a fraud even after committing a particular fraud he's saying that no I have not done anything wrong because

that company owes me I am working in that particular company and I have right to take the money from that particular

company he's rationalizing it or else he's saying like I'm very closely related to the manager manager and I are

very close friends and I can have a right to take the money from that manager desk because we are very close

enough I'll just put it back when I get my payback that is a rationalization attitude which a person

will have he'll not think like it is a wrongdoing or a fraudulent activity he'll always say like this is a right of

my doing it so that is called as attitude now coming to opportunity opportunity is that enables a person to

commit fraud so there is an opportunity for that particular individual on conducting that particular fraud for

example there is an open room like this and there are crows of money which has put in an put here in an open box and

the door is open will no one come and take that money no they will come and take that money if anyone are asking

coming and asking uh Regarding why you have took this money the what that person will say this is uninspected

money no one is here so I have come here first so this will be my money so what he'll say no one is here no one is

demanding or no one is own taking the ownership of this money so I came first so this is my money I am the owner for

this money because he has the opportunity to take that money he will commit that particular fraud so these

are the three elements which leads to fraud triangle this is the fraud triangle at one side it will be

incentive attitude opportunity so these are the fraud triangle this can be used as a tool for conducting forensic

auditing so in planning of Investigation they can use an effective tool like fraud triangle to know about the

forensic audit or fraud which is happening in that particular entity so this is a planning process identify what

is the the type of fraud how long it has been operating how fraud has been concealed like it has been done how it

has been come to picture how everyone has known about that particular fraud identifying fraud sters who have

involved in that particular fraud Financial loss suffered by the client Gathering evidence to proceed in the

court and to provide that advisor to prevent reoccurrence of the fraud these all should be there in the planning

process of that particular forensic audit so this is our second step or second investigation methodology in

forensic audit now getting into third investigation methodology Gathering evidence we have certain techniques that

can be used for Gathering the evidence what are those techniques first they can go for reviewing the public documents

and conducting background investigation checks so they can uh go to the public documents they can review them they can

check them and gather the evidence they can conduct detailed interviews they can go to the least working people in that

particular organization like sleeper or a worker or any uh Watchman or something and they can go directly and conduct the

interviews they can ask regarding the explanation or management doings they can go and interview them GA information

from the trustworthy sources always when auditor is getting any evidence that should be from a trustworthy Source why

from trustworthy source so that the evidence is not also falsified if he's collecting the evidence but that

evidence is coming as a false evidence then entire forensic audit will go wrong so evidence which is collected should be

from a trustworthy source that should be reliable enough to get into the forensic audit conducting surveillance he can not

only go on and documents he can not only check the data he can directly do the surveillance of how the employees are

working how the management is working how the directors of that particular company are working is everything is in

under control or not whether the meetings are conducting or not he can surveillance that also going undercover

going undercover is not like changing everything get up and all but he can go on in detail from external environment

also and go on verify regarding the organization environment and activities analyzing financial statements he can

analyze regarding the financial statements after every gathers uh evidence is gathered he can analyze

whatever evidence gathered also so this is the third investigation methodology which can be conducted now fourth

investigation methodology is reporting after investigating and Gathering evidence investigating team will submit

a report now auditor is there auditor under auditor they will have a team a team of members A Partners who will be

called as a investigating team that investigating team after Gathering evidence after conducting forensic audit

at last they have to give a forensic audit report what will be there in that particular report findings of

Investigation whatever findings they have in that particular investigation that will be in that particular report

summary of evidence collected whatever evidence collected that will be there conclusions about loss suffered for that

particular fraud how much loss has been suffered by company by shareholders by customers by clients everyone how fraud

was planned and how it is unfolded how fraud is planned and how it is unfolded like how it has been uh committed and

how it has been got into picturization whole trail of evens the entire trail of events like from this period to this

period this step to this step part of everything how it has been made up suggestions to prevent fraud in the

future all these information will be in that particular report now coming to F fifth me investigation methodology at

last what they have to do they have to give that particular evidence in that particular court now planning is done

investigation is done evidence is collected conclusions are given findings are there everything is there now the

evidence has to be given to the court of law auditors to be called to jurisdictional court to lay down facts

and findings as easy understandable so this is nothing but fifth step so this is the investigation methodology which

is our concept six accepting the investigation planning the investigation Gathering the evidence reporting and

Court proceedings that is the investigation methodology now coming into Concept Seven need for forensic

audit in my handr notes I have given a n step method for fact finding this is not so important if investigation

methodology question is asked in your examination you can write that fifth point five points that will be more than

sufficient but here it is a nin step process of fact finding that is investigation methodology but this is

for a fact finding nothing but those Five Points adding on with four points accepting forensic AIT engagement is our

first investigation methodology now after that they will evaluate whether the suspicion is correct or not whether

the allegations which are put in that particular company are correct or not next they'll conduct due diligence

background checks next they'll complete the preliminary stage of Investigation like before getting into investigation

itself what are the matters to be dealt with next checking prediction assuming that there is a litigation which means

they will doubt everything they'll question everything after questioning they'll go on with the investigation

begin with an external investigation not not only internal checking the Records books they'll go to the external

investigation like go on to the employees and conducting interviews go on with the outside invironments going

on to the competitors and asking about that particular organization begin with the external investigation gather

evidence required and proofs required they will gather the evidence prepare report of findings and at last produce

in the court so this is a nin step process which can be followed for fact finding this is not that so important

but you can see it now getting into next concept need for forensic audit what is the need for forensic audit forensic

audit is an early warning signal for fraud so it is an early warning signal which is done to detect the fraud and to

determine organization needs so five forensic AIT is conducted to detect whether there is any fraud and

organization needs what are these organization needs nothing but whether there is an asset misappropriation to

find out corruption to find out financial statements fraud why management wants forensic audit to be

conducted that is nothing but organization needs okay now few instances occurrence of which entity

direct forensic audit check her okay now there are certain few

instances which can be occurred by which entity can die direct forensic audit what are those instances like what are

those activities which can lead company to go on with that particular forensic audit if there are any theft of business

information where Business Systems have been hacked directly business information itself have been theft it

has been hacked in that case forensic AIT can be done issues identified by whistleblower whistleblower is nothing

but an individual who is already working in that particular or organization who provides right information to the right

person that they believe evidence wrongdoing so any person who is working in that particular organization who can

be anyone it could be an employee or anyone mostly the employees will be the one who will uh come and tell about the

wrongdoings so they will be called as a whistleblower so whatever wrongdoings are happening in that particular

business with an Evidence if he is coming and giving that information to the right person that in that case that

individual will be called as a whistleblower if any issues are identified by whistleblower in that case

also that can lead to forensic audit reconciliation results is identified materially different if any

reconciliation statements are being prepared like reconciliation between finan Financial audit and cost audit or

reconciliation between cash book and bank bank book whatever reconciliation proceedings are happening in that case

there is a huge difference which can directly impact the decision making of that particular entity in that case also

forensic audit can be conducted suspicions of fraud or illegal activity when there is any fraud or illegal

activity suspicion in that particular business in that case also forensic audit can be conducted turnover and

balances are showing negative results if negatively turnover and uh balances are there not at all profits are there

everything is going under losses but activities are going in a proper way in that particular business in all these

instant cases this can lead to forensic audit that is nothing but need for forensic audit when in any organization

any of these activities are being done that can lead to forensic audit so that is our Concept Seven need

for forensic audit now getting into our concept eight forensic audit procedures what are the procedures to be followed

by a forensic audit we have four steps professional skepticism what is professional skepticism professional

skepticism is nothing but having a questioning mind or doubtful mind approach the audit with skepticism and

question the authenticity of the financial records always they have to question regarding the financial records

whether the financial records are proper or not whether the amounts are recorded correctly or not whether each and every

material information is recorded in that Financial records or not always the questioning mindset should be there for

that particular auditor that is called as professional skepticism that is one of the procedure and getting to the

second Point scientific approach what is the scientific approach for example the other entity is there in which that

particular forensic audit procedure has been followed now in our company we want to take the same procedure which has

been followed by the other entity because it has successfully done it and it has successfully uncovered the fraud

which has happened in that particular entity so we want to take the same procedure in our company also because

the both businesses or the both line of businesses are similar we can do so like that which is called a scientific

approach which means already it has been designed and it has been detected the fraud such kind of procedures we are

applying it use systematic forensic audit procedures designed to detect material misstatements and fraudulent

activities which are already designed we are using them that are called as scientific

approach now forensic data analysis what is forensic data analysis employ data analysis techniques to investigate

potential fraud and misstatements if you are getting into any data analysis techniques to uncover the fraud that is

called as forensic data analysis now what last foren fraud investigation techniques which we have already

discussed as a tool of fraud triangle address three common elements of fraud incentive attitude and opportunity or

conducting interviews or doing any surveillance or document reviews all are these techniques for fraud investigation

so these four are the forensic audit procedures which can be followed by The Entity to uncover any fraud or crime

that is our concept 8 now getting into concept nine till now we have seen regarding fraud fraud fraud what what is

this fraud fraud is nothing but a we know what is fraud fraud is nothing but to deceive others if anyone is doing

anything that is fraud but what is the actual definition which we have for fraud we are going to see that now fraud

is nothing but a deliberate act which means doing something or failure to act or re refraining to do something to

obtain an unauthorized benefit if they are doing something or restraining to do their own job to get a benefit for

oneself or for a institution by deception deception is nothing but deceiving others which means

even if they know that other person will not get any benefit if other person will be having any losses or uh uh any um

wrongdoing from that even then also they are committing that mistake that is called as deception to deceive others

false suggestion giving any false suggestion even if they know that will lead to losses suppression of Truth they

are not telling the truth about that particular activity unethical means doing any illegal means by doing all

these and not only doing this which are believed and relied upon by others by doing all these they are getting some

benefit and this benefit is believed by others that this is legal benefit then such kind of activity is called as a

fraud which is called as a deliberate act or failure to act to get an authorized benefit by following all

these which are believed and relied upon by others which is called as fraud now what are the examples of fraudulent

activities these are the examples which we have for fraudulent activities which is called as embezzlement forgery or

alteration of documents fraudulent financial reporting unauthorized alteration or manipulation of computer

files digital documents alteration misappropriation or misuse of resources authorization or receipt of payment of

goods not received or services not performed as we have seen fictitious suppliers even there is no not at all

supplier but the authorization for doing the payment for that particular supplier is given by the management which means

management didn't check on that particular supplier so authorization or receipt of payment also leads to

fraudulent act authorization or receipt of unearned wages or benefit which is payroll fraud conflict of interest or

violation of Ethics if they are having any conflict of interest with the company or doing any violation of Ethics

all these are the examples of fraudulent activities so that is our concept nine this is the definition of Fraud and

these are the examples of fraudulent activities which we have discussed now getting into a concept in business

fraud what is business fraud now we know fora fraud we know regarding forensic audit now what is business fraud

business fraud is nothing but which can be also called as corporate fraud which involves illegal unethical or deceptive

actions committed by a company or an individual in their capacity as an employee for this committing a fraud he

need not be an EMP employee or a person working in the organization anyone if he is doing any

act to deceive the company that will be called as a fraud but the person in their own capacity as working in that

particular entity if he is committing any illegal or deceptive actions that will be called as corporate fraud the

individual who's working in that particular business is conducting fraudulent activities those will be

corporate frauds so this is business fraud or corporate fraud illegal unethical and

deceptive actions committed by a company or individual acting in their capacity as employee of the

company often extremely complicated and difficult to identify usually this type of business frauds are very much uh

difficult to identify they'll not come to picture because they will do they will be doing that particular fraud in

such a way that no one will be able to detect it no one will be able to suspect that particular fraud usually takes

months to unravel so coming to complexity corporate fraud schemes are often highly

complex which means that will be in a huge number and difficult to uh uncover challenging to detect sometimes taking

months for forensic accountants to unre scale of fraud large scale corporate FS perpetrated by top Executives can EXT to

billions of dollars mostly this business fraud will not be done by any small uh person like Watchman or any sweeper or

any employee who's having a less salary but who have the entire authorization in that particular company like top

Executives will do such kind of corporate frauds which can go extended up to billions of dollars now who will

be the victims for this particular business fraud consumers clients creditors investors other businesses and

even the company itself and its employees can also be the victims of that particular corporate fraud and

coming to consequences what can be the consequence it can led the company to May phas severe Financial Rune which can

lead to bankruptcy so by conducting this for corporate fraud or by happening of this

business fraud the company will lead to bankruptcy or insolvency so this is our concept 10 which is called as business

fraud and coming to the last Point recovery challenges for example there is a business fraud happened in that

particular company in which manager is involved and he Tak and he had the benefit of100 billion doar of

cash and this fraud has been uncovered after 10 years of period now the forensic accountant or the fraud

examiner is going to that particular manager's place for example his home or his office and going and checking for

that1 10 billion cash will they find out no till now what what it could have happened the manager could have invested

it in some other place he could have done anything with that amount so majorly money obtained through corporate

fraud is often irrecoverable but any kind of immobile property if he has taken or any asset M appropriation has

happened they can again take that asset back they can again take that immovable property back but money involved cannot

be taken back that cannot be recovered back in cases of business fraud so that is our concept 10 now coming to concept

11 reasons for corporate fraud what are the reasons for corporate fraud why corporate fraud happens the

desire or perceived need to attract or retain investors which means they are telling the investors that my company is

a very short enough our products are the best products in the entire world just come and invest in our particular entity

and you will get profits in no time they're trying to get the investors attention to invest most of money in

their particular company or whatever investors who have already invested they're trying to retain them they're

trying uh they are telling that investors like no our company is performing very well our company is in

profits and you will get your interest back so to desire to perceive the need to attract the investors or to retain

the investors who have already invested in our particular company for that the fraud can happen problems or defects

with company's products that they want to hide if there are any problems with any particular uh product if there are

any defect in that particular product will company tell regarding the defects no they will not tell the regarding

defects or comp applications by taking that particular product they will always tell like my product is the best product

in this world you have to buy it and you will be most healthiest person in this world if you take our particular product

so this kind of defects will be done by pharmaceutical companies they will only tell regarding the tablet uses they'll

not regard they'll not tell regarding the complications or Side Effects by taking that particular

medication so desire to attract retain investors problems with the company's product these are the two reasons for

committing any corporate fraud now what are the regulatory challenges which we have regulatory authorities like sebi

can attempt to prevent and punish the corporate fraud so sebbi what they'll do if they find out any corporate fraud has

happened in any business they'll try to prevent and punish the persons who have involved in that particular corporate

fraud but detection can be delayed because corporate frauds will be in a huge amount and will be conducted by

home top Executives in particular entity this will be taken lot of time to be detected especially in private companies

not required to disclose financials at all there are certain private companies which are not at all required to give

financials we could be able to detect the fraud which has done in the particular company only if we examine

the financial records or financial statements now the sebi does not have any Financial records about that

particular entity how they will try to detect it they will not have any source to find out the fraud in that particular

company so this is nothing but regulatory challenges the detection can be delayed and when the private

companies does not disclose the financials the sebi also cannot take any preventive

actions now coming to Major for corporate fraud cases these are the examples of the cases which has been

happened in in life like in Practical cases these are the practical cases in which fraud

has been committed you can write these as examples in your Examination for any question which has been asked in the

forensic audit whatever question which could be asked in the fory CIT you can write these as

examples now what are the major corporate fraud cases Enron company what does this andron company do the

executives H financial troubles through massive accounting fraud they have done a massive accounting fraud and they have

hid all the financial troubles which they have even that company's learning losses they have showed it as profits

resulted in bankruptcy and the sarbas Oxley act has been introduced for greater transparency only after this

Enron company case we had bought a new act which is called as sarbanes Oxley act in

2002 now Waste Management Company what did happen in this particular Waste Management Company Waste Management

Company the previous owner who is there in that particular waste management company had done a lots of fraud he

has misstated all the financial records now that particular owner has been exchanged with the new owner the new

owner has been introduced for that particular business now what when this new owner has entered in that business

he has found out that all the financial statements are in wrongdoing that is fraud happening in this particular

company now this new owner had gone to the authorities and given all the proofs regarding the fraud and told that till

now there has been fraud happening in this particular company now I am the new owner and I will pay the penality for

happening till now and I will run the business correctly from now so previously perpetrated a multi-billion

dollar accounting fraud survived the Scandal under new leadership but faced penality there was new leadership but

after paying penalities it was running correctly that is regarding waste management and for at best company

founder Barry MCO engaged in Ponzi scheme fabricating customers he tried he uh entirely deceived the customers he

told that customers will get the product he had collected all the amounts from them but the products weren't given to

the customers the company collapsed shortly after going public so that is with

regarding the foret bestest company now wireart company discovered a two doll2 billion discrepancy between its books

and actual cash in books everything is recorded as we have purchased raw materials from them or we have made the

sales of this amount but no cash amount was recorded every entry was recorded as we have done purchases we have done

sales we have done investment we have this much of income we have this much of profit everything is recorded by but in

cash it was zero balance led to bankruptcy and the arrest of CEO Wells forgo and Company high

pressure sales Kota led to employees opening fake accounts when higher sales pressure is there employees usually

taken more fake accounts resulted in billion dollars in fines and loss of clients when uncovered so entire fake

accounts has been created in this particular Wells Fargo company so these are the cases or examples of the

corporate frauds which had happened in the Practical life so this is regarding our concept

11 this is what I have given here why corporate fraud happens and these are the examples of major corporate

fraud yes now we're going to start our next concept fraud triangle fraud triangle has three elements in it

opportunity rationalization pressure what is opportunity if there are any weaknesses in internal controls like

there is a inadequate supervision or review for The Works of employees or Works regarding the management or Works

regarding directors there is no supervision and reviewing at all then it is weakness of internal control when

there is no proper separation of duties when employee is not given uh saying that this is only up to your duty you're

only allowed till this you have only access till this work if there is a proper separation of Duties he know

about his duties he'll only do up to that he'll not go beyond the powers he'll not go beyond the rights which he

have but if there is no proper separation of Duties he'll tell that no one will no one will question me because

no one told me that this is my duty I'll go and do that I'll go and uh I'll go to direct CEO room if there is no

unrestricted access you'll go inside any room so there should be be a separation of Duties management approval for each

and everything which is done in the company needs a management approval if there is no management approval then

everyone will do whatever they want but if there is a management approval they'll properly come for the approval

from the management management will verify regarding the work if approval is given they'll perform that particular

work system controls if controls are proper in that particular system if internal controls are very proper there

will be proper uh way of doing any particular thing the Departments will work under that particular internal

controls only the workers will work in that particular internal controls only so there needs to be everything if any

of these things are not proper then that leads to opportunity for committing any fraud so that is the first fraud

triangle now coming to the second pleasure it is a motive due to personal financial problems due to any unforeseen

expenses due to personal addiction such as gambling drugs unrealistic deadlines performance goals this all leads to

pressure for gambling for drugs they need money and for money what they'll do they'll go for fraud to earn that money

in a fraudulent manner that is nothing but pressure rationalization I need this money I'll pay it back when I get it

back I didn't get the rise the company owes me these are the two cases where the attitude of that particular person

will deal with rationalization so these are the three elements which cause an fraud triangle breaking the fraud

triangle when the fraud triangle can be breaked fraud triangle can be breaked only in one element which is opportunity

opportunity is given by the company to that particular individual who is committing the fraud so we can eliminate

the opportunity from the fraud triangle by by implementing better internal controls by keeping very string and

rules in that particular entity or organization we can break the opportunity removing one of the to

reduce fraudulent activities they can remove the opportunity because it provides more actionable route to be to

do fraud so we can eliminate the opportunity and break the fraud triangle so that is but nothing but

fraud triangle which I have given this is fraud deterence fraud deterence is nothing but breaking the fraud triangle

now we have concept 13 red flax of fraud we have red flax these red flags are in two two cases employees red flag and

management red flag okay red flags are nothing but warning signals that fraud risk is higher

without any evidence of fraud occurring red flags of fraud is nothing but there is a fraud happening in that particular

company but there is a no evidence of occurrence of that particular fraud so these are warning signals that fraud is

being occurred occurred these are nothing but red flags of fraud which has to be always analyzed by the management

and the company if only one or two flags are there in that particular entity then that is not a very big thing to be

overly concerned about they can only be less concerned about just take the proper steps and that will be resolved

but if there are multiple Flags then that should be directly reported to the internal audit Department they will take

the properly measures okay now what are the red flags employee red flags and management red flx sudden

lifestyle changes for employee red flx sudden Lifestyle Changes till now he used to come by walk but today he comes

in Ben's car sudden lifestyle changes if he ask he'll tell that this is my own car he's doing buildup coming to the

office late at 10:00 and saying that I'll buy this entire company in just 10 days if anyone is asking he's saying

that I'll buy this entire company in 10 days and you will be worker working under me total lifestyle changes are

changing suddenly significant personal debt and credit problems till now when he comes to office he used to be very

much stressed with his debt problems he used to always complain about the debt which he's having I have lots of debt

what to do how to do it the the salary which I'm getting is not sufficient to pay by debts he used to complaint but

suddenly he's coming to the office and saying that all my debts are clear enough I'm free from all my debts I

don't have any personal debt I'm trying to take a new house not in debt by in full payment so these are employees red

FL behavioral changes till now he used to not have addiction even for a cigarette but suddenly he's going to

gambling he's going to casinos he's investing lots of money he's taking lot of money he's putting lot of money in

those gambling and casinos and that is sudden behavioral changes fear of losing job always is thinking that if manager

is calling if someone is coming and telling manager is calling you he's fearing that why manager is calling me

what is he going to talk to me what is he going to ask about his having a fear of losing job refusal to take vacations

or leaves even if the head of the company is coming and asking him to Babu take leave for two days because you are