Forensic auditing examines individual or company financial records as an investigative measure that attempts to derive evidence suitable for use in litigation.
There is a significant difference between auditing and forensic accounting, Auditing is governed by materiality.
Investigative accounting, is the opposite. The forensic investigative accountant/auditor is looking for one transaction that will be the key. It is the one transaction that is a little different, no matter how small, and that will open the door. Discovery of that seemingly immaterial transaction is vital. Fraud typically starts slowly and/or small because the perpetrator(s) will test the system. If they get away with it, then it will continue to increase.
Forensic auditing can sometimes be referred to as forensic accounting.
Forensic auditing combines investigative techniques along with an understanding of accounting principles to determine if there are suspicious practices hiding beneath company or individual financial records and statements.
Forensic auditors are trained and are experienced to present their findings in legal proceedings that concern fraud, embezzlement, or financial disputes.