Forensic Audit & Investigation

Forensic audit and investigation engagements in India sit at the intersection of two distinct regulatory anchors: the statutory auditor's fraud-reporting duty under company law, and the professional standards that govern how a forensic engagement itself must be conducted.

First, Section 143(12) of the Companies Act, 2013, read with Rule 13 of the Companies (Audit and Auditors) Rules, 2014, obliges a statutory auditor who suspects fraud against the company by its officers or employees to report it. Where the fraud involves or is expected to involve ₹1 crore or more, the auditor must notify the Board/Audit Committee within 2 days of knowledge (seeking a reply within 45 days) and then report to the Central Government in Form ADT-4 within 15 days of receiving that reply — a combined ~60-day statutory window. Frauds below ₹1 crore are reported only to the Audit Committee or Board, with no Central Government filing. It is frequently this auditor escalation, or an internal whistleblower report, that triggers the need for an independent forensic audit to establish facts before the ADT-4 clock or any board response is finalised.

Second, the conduct of the forensic engagement itself is governed by the Forensic Accounting and Investigation Standards (FAIS) issued by the Institute of Chartered Accountants of India (ICAI). The ICAI Central Council approved FAIS, together with an Implementation Guide, at its 422nd meeting on 30 June 2023, and made the standards mandatory for all forensic accounting and investigation engagements of ICAI members commencing on or after 1 July 2023. FAIS comprises a set of principle-based standards covering engagement acceptance, evidence collection, analysis, and reporting, and India is the first jurisdiction globally to issue a dedicated standards framework of this kind.

Our forensic audit engagements are conducted under the FAIS framework and are scoped to produce findings and evidence documentation suitable for use in any resulting Section 143(12)/Rule 13 escalation, Board inquiry, or legal proceeding.

Forensic audit and investigation is the independent examination of a company's financial records to uncover fraud, embezzlement and accounting irregularities — conducted by chartered accountants with the discipline that the findings may be used in legal proceedings. The investigation tests the records — books of account maintained under Section 128 of the Companies Act 2013, banking records, contracts and digital trails — with findings shaped for Section 143(12) fraud-reporting and Section 143(3) report purposes where the engagement requires it, and reconstructs what actually happened where the books do not tell the truth. The deliverable is a findings report with the evidence documented.

The investigation follows a discipline of suspicion without assumption: what does the pattern of vendor payments show, where did the cash go, why do the margins move with the inventory counts, who approved the transactions that do not make sense. Each finding is verified against independent evidence — bank statements, confirmations, contracts, digital records — because a forensic finding without the evidence trail is an accusation, and with it, a case.

The cost of fraud left undiscovered is the compounding leak — and the cost of a poorly conducted investigation is worse: findings that collapse at the first legal challenge, evidence collected without the chain of custody, and a report that cannot be used in the recovery or the prosecution. The investigation is only as valuable as the evidence behind it.

This service is for companies, boards, audit committees and institutions investigating suspected fraud, embezzlement, misappropriation or accounting manipulation. We plan the investigation, collect and preserve the evidence, test the transactions, interview where needed, and deliver the findings report with the quantification and the recommendations — built for the recovery, the disciplinary action or the legal proceedings that follow.