Comparative Analysis Of Forensic Audit And Traditional Audit Practices: Implications For Fraud Detection
Volume 7 - Issue 4, April 2024 Edition
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Author(s)
Tracey Heywood B.Sc., IMBA; Ashraf Mozayani, Pharm D., Ph.D.
Keywords
Auditing practices, financial fraud, forensic audit, and traditional audit.
Abstract
This study examines the effectiveness of forensic audit and traditional audit procedures in detecting and preventing financial fraud. Forensic audit is a specialist field that specifically investigates fraud and financial irregularities. In contrast, traditional audit primarily focuses on assuring financial transparency and compliance with regulations. The research uses an interdisciplinary approach to analyze the advantages and disadvantages of different audit procedures using agency theory, fraud triangle theory, institutional theory, and risk management theory. By conducting a comprehensive analysis of pertinent literature and examining real-life examples, the research provides suggestions for improving fraud detection systems and fortifying corporate governance structures. The results emphasize the necessity for firms to integrate forensic and conventional audit techniques to achieve efficient financial supervision and risk reduction. . The findings indicate that forensic audits offer superior capabilities in detecting complex fraud cases and providing actionable insights, albeit at a higher cost and potential disruption to normal business operations. Traditional audits are more economical and efficient for routine financial supervision but may lack the specificity and depth required for uncovering intricate fraudulent schemes. The study emphasizes the importance of integrating forensic techniques into traditional audit practices to enhance fraud detection capabilities. It also emphasizes the role of emerging technologies, such as data mining and advanced analytics, in augmenting audit processes for more effective fraud prevention. The study contributes significantly to the existing knowledge base of auditing methods and financial crime detection, offering practical guidance to strengthen fraud detection techniques and prevention measures. The findings provide valuable insights for auditors, regulators, and legislators, offering practical guidance to strengthen fraud detection techniques and prevention measures. By understanding the advantages and limitations of each approach, organizations can allocate resources more effectively and implement targeted measures to mitigate financial fraud risks.
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