The process of forensic audit is similar to that of a financial audit with similar steps of planning, collecting evidence a report writing the difference being that forensic audits have a potential additional step of a court appearance.
A forensic loan audit involves a scientific investigation of a loan to determine if any laws have been violated. The forensic auditor will look for cases of fraud in the form of bribery, extortion, and conflict of interest.
Forensic loan audits are done by reconciling the loans to the general trial balance. The loans are then checked against any movement throughout the period. The auditor then tests the addition of the loans during the period of audit and check on the balance interest rates and maturity date of the loan.
The importance of performing forensic loan audits is to ensure that the loan was offered legally so that the client will not have trouble when paying back. The borrower needs to understand the clauses that are contained when signing for a loan to avoid future problems.
The forensic loan audit ensures that the correct procedures are adhered to by the lender and that any cases of fraud are caught early. After a thorough investigation is done, a comprehensive report should be written to provide adequate information for the borrower in case he/she wants to follow up cases of fraud in the courts.
A certified forensic loan is offered once all the checks have been made to ensure that the loan being given has no cases of fraud. Certified loans are ones that contain clauses with complete information on the lender’s account to avoid misappropriation and withholding of information. This information should be shared openly with all the parties involved. An audited loan passes all the legal checks required by federal and local laws.
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