The Difference between Auditors and Forensic Accountants

Auditors/Auditing Forensic Accountants/forensic Accounting

determining whether a company’s reported financial examination of specific records and information to help
position and performance are fairly represented and in determine facts related to a suspicion or allegation of
accordance with certain accounting standards. fraud.
Audits and forensic investigations are different services that are planned and performed to accomplish unique
objectives. While both have a responsibility to detect fraud, the degree of that responsibility is substantially
different.
help provide confidence in the world’s financial system assist entities in conducting an investigation by providing
by performing audits of financial statements to provide their expertise, from the initial allegation or suspicion of
assurance that company management is presenting a fraud to resolution, whether the end result is restitution,
“true and fair” view of a company’s financial position and litigation, an insurance claim, referral to a law
performance. enforcement agency or proof that no fraud occurred.
express an opinion on whether the financial statements The forensic accountant’s role in litigation is to report on
are presented fairly, in all material respects, in legally obtained evidence objectively, succinctly, and
accordance with an applicable financial reporting with a sufficiently explained foundation. For matters in
framework. litigation, there must be evidence provided to the trier of
fact – beyond a reasonable doubt in criminal cases, and
by a preponderance of the evidence in civil cases.
An auditor owes primary allegiance to the investing A forensic accountant is not concerned with reaching a
public, and the objective is general in nature.. general opinion on the financial statements as a whole;
his or her objective is more specific in nature as defined
by the scope of services in the engagement letter, and
the work is typically directed through counsel and,
therefore, privileged and confidential
Auditing has a program and plan from the start that Forensic accounting starts with a plan that at any point in
usually doesn’t take any turns. the investigation may require a pivot and new direction
based on findings.
The auditor attests to the assertions of other parties. In In a forensic investigation, the practitioner develops
an attest service, the practitioner expresses a conclusion findings, conclusions, and recommendations based on
about the reliability of a written assertion that is the the evidence discovered during a forensic investigation.
responsibility of another party – such as company
management.
auditor must adhere to applicable auditing standards and A forensic accountant is typically hired by counsel on
include prescribed engagement terms. behalf of a client to maintain the privilege of
communications, and adheres to less restrictive
engagement term standards as those by an auditor.
Audits are planned periodically and on a recurring basis. Forensic investigations are unforeseen, reactive and
nonrecurring.
The allegation or suspicion of fraud is not the basis of an A forensic investigation begins with an allegation or
audit. suspicion of fraud.
An audit is an obligated engagement for which a Forensic investigations are typically conducted
company must hire an auditor to provide an opinion on voluntarily because a company has a suspicion or
the truthfulness and fairness of its financial statements. allegation of fraud.
An audit is performed by auditors who are CPAs. A forensic investigation is typically performed by a
multidiscipline team of experts that often includes CPAs.
The appointment of an auditor is made by the  forensic accountant is appointed by the
shareholders of the company. owners/management, counsel or a third party.