a. Concept of Forensic Accounting, Forensic Investigation, and Forensic Audit

Forensic Accounting:
Forensic accounting is the integration of accounting, auditing, and investigative skills to uncover fraud, corruption, or financial irregularities. It involves gathering financial information systematically and analyzing it to provide legal evidence in courts or other dispute resolution forums.

Forensic Investigation:
This is the detailed examination of financial information to uncover fraudulent activities or irregularities. It aims to establish whether a financial crime has occurred, identify the perpetrator(s), and quantify the financial loss.

Forensic Audit:
A forensic audit is a specialized audit focused on identifying financial crimes, misstatements, or discrepancies in financial records. Unlike routine audits, forensic audits prioritize evidence collection and validation to support legal proceedings.

b. Fundamental Principles of the IFAC Code of Ethics Applied to Forensic Investigation

The International Federation of Accountants (IFAC) outlines five fundamental principles for professional accountants:

1. Integrity:
   • Forensic accountants must act honestly and transparently during the investigation, ensuring objectivity in their findings.
2. Objectivity:
   • They must avoid bias or undue influence while evaluating evidence to ensure credibility.
3. Professional Competence and Due Care:
   • Forensic accountants should possess the necessary skills and keep updated on relevant techniques and regulatory standards.
4. Confidentiality:
   • Information acquired during the investigation must be protected unless disclosure is authorized or required by law.
5. Professional Behavior:
   • Forensic accountants should avoid actions that could discredit the profession or compromise the investigation.

c. Procedures for Forensic Investigation Engagement for Ayeniromo Microfinance Bank

1. Understanding Engagement Objectives:
   • Define the scope based on the terms of reference, including investigating the occurrence of fraud, identifying perpetrators, and estimating financial losses.
2. Planning the Investigation:
   • Develop a detailed work plan, including timelines, evidence collection methods, and resource allocation.
3. Gathering Evidence:
   • Obtain relevant records, interview stakeholders, and utilize data analytics tools to identify anomalies.
   • Inspect physical documents, digital records, and transaction logs.
4. Analyzing Financial Data:
   • Identify discrepancies, trace misappropriated funds, and quantify the financial loss.
   • Use benchmarking techniques to compare against expected operational performance.
5. Interviews and Questioning:
   • Conduct interviews with implicated staff members and witnesses while adhering to ethical standards and confidentiality.
6. Collaboration with Legal Experts:
   • Work alongside legal counsel to ensure findings meet evidentiary standards for court proceedings.
7. Reporting Findings:
   • Present a detailed report outlining the nature of the fraud, perpetrators, and the financial loss. Include documentation and evidence to support the findings.
8. Court Testimony:
   • Prepare to present findings in court and defend the investigative process and conclusions if required.