Question

Which is not true about a forensic audit?

-Principles-based.
-Broad ranging.
-Proactive and ongoing.
-Ensure GAAP is followed.
-Future and historical.

Answer 1

Forensic audits are retrospective, investigatory audits that are not proactive and ongoing but are initiated in response to suspicions of financial misconduct.

Step-by-step explanation:

The statement 'Proactive and ongoing' is not true about a forensic audit. Forensic audits are usually retrospective and investigatory in nature, conducted to examine the financial records of an entity when there is suspicion of fraud, embezzlement, or other financial misconduct. While they are broad ranging and principles-based, forensic audits are reactive, initiated in response to a specific incident or suspicion and focused on the historical financial activities to ensure GAAP (Generally Accepted Accounting Principles) compliance and to uncover any irregularities. They are not routinely conducted as an ongoing process.