A forensic review is not an audit, and investors should know the difference

An investor asks for "a forensic audit" of a target. What they usually want is someone to go through the books and tell them what does not add up. That is valuable work, but it is not an audit, and calling it one creates confusion about what the report actually says.

India's chartered accountancy body has been explicit about this. In its 2025 exposure drafts of updated Forensic Accounting and Investigation Standards, ICAI emphasised separating forensic investigations from statutory audits and discouraged the label "forensic audit" altogether.

What each one answers

• A statutory audit gives an opinion on whether the financial statements are fairly presented, under auditing standards, by a licensed auditor.
• A forensic review looks for specific risks such as fraud, diversion of funds or money laundering, and reports findings within an agreed scope.
• Agreed-upon procedures report exactly what was tested and what was found, without an overall opinion.

Why the scope matters

A good forensic report says plainly what was in scope, which data was tested, what was not reviewed, and who reviewed it. That clarity protects everyone. The investor knows what they are relying on, the company knows what was examined, and the reviewer is not taking on a responsibility that belongs to the statutory auditor.

Clear scope is not a disclaimer. It is what makes a finding usable.

Every Finaley report states its scope and limitations in writing, and is signed by a credentialed professional in the client's jurisdiction.