Question

Which of the following is correct about forensic audits. a.All audit engagements are forensic in nature. b.Forensic audits are performed by law firms; they are not performed by CPA firms. c.Forensic audits are equivalent to compliance audits. d.Forensic audits are usually performed in situations in which fraud has been found or is suspected.

Answer 1

Forensic audits are usually performed in situations in which fraud has been found or is suspected.

Step-by-step explanation:

The correct option about forensic audits is d. Forensic audits are usually performed in situations in which fraud has been found or is suspected.

Forensic audits involve the examination of financial records and transactions to identify any irregularities that may indicate fraud. These audits are typically carried out by CPAs (Certified Public Accountants) who specialize in forensic accounting.

For example, if a company suspects embezzlement or financial misappropriation, they may hire a forensic auditor to investigate the matter. The auditor will analyze financial statements, bank records, and other relevant documents to uncover any evidence of fraud.