Forensic & Fraud Investigation
Uncover the truth. Quantify the loss. Strengthen controls.
By Nexgenca
What is a Forensic & Fraud Investigation Audit?
A forensic audit is a fact-finding, evidence-driven examination of transactions, records, systems, and behaviors to detect, prove, and quantify fraud or misconduct. Unlike a routine statutory or internal audit, it’s designed to stand up in court—with defensible procedures, preserved evidence, and clear linkages between people, payments, and events.
When should you trigger a forensic audit?
- Whistleblower complaints or hotline tips
- Unusual spikes in expenses, credit notes, write-offs, or vendor additions
- Cash/stock shortages, inventory shrinkage, or revenue recognition anomalies
- Conflicts of interest, procurement irregularities, or duplicate payments
- Cyber incidents: email compromise, data exfiltration, invoice tampering
- Regulator/lender queries or board-level concerns
What types of fraud do we investigate?
- Asset Misappropriation: skimming, lapping, theft of inventory, ghost employees
- Corruption & Bribery: kickbacks, bid-rigging, facilitation payments
- Financial Statement Fraud: revenue inflation, expense capitalization, round-tripping
- Procurement & Vendor Fraud: shell entities, collusion, price padding, fake invoices
- Expense Abuse: travel/entertainment, reimbursement duplications, split bills
- Cyber-enabled Fraud: business email compromise, phishing-led payment diversions
- Related-Party & Conflict of Interest Schemes
- Banking/FinTech Irregularities: chargebacks, mule accounts, KYC bypass
Nexgenca’s Investigation Methodology
We follow a court-defensible workflow aligned with leading practices (ACFE, IIA IPPF, ISO 27037 for evidence handling, NIST incident-response concepts).
- Intake & Scoping
- Define allegations, custodians, systems, period under review
- Risk, materiality, and legal/regulatory context
- Engagement protocols (privilege via counsel, confidentiality)
- Evidence Preservation (Chain of Custody)
- Legal hold notices; suspend auto-deletions
- Forensic imaging of devices/servers (hash values recorded)
- Secure evidence register (who, what, when, where, why)
- Data Acquisition & Integrity
- ERP/accounting, bank statements, invoices, GRNs/POs, payroll
- Emails, chats, logs, access records, CCTV metadata
- Third-party confirmations (vendors, customers, banks)
- Forensic Data Analytics
- Benford’s Law, z-score outliers, fuzzy matching (near-duplicates)
- Network/link analysis (common addresses, IPs, phones, directors)
- Continuous control tests (3-way match breaks, weekend postings, round amounts)
- Text analytics on emails (keywords, sentiment, timelines)
- Substantive Testing & Corroboration
- Vouching to source docs, site visits, stock counts, vendor validations
- Bank trail & flow-of-funds mapping to ultimate beneficiaries
- Lifestyle checks consistent with policy and law
- Interviews & Confession-Led Inquiries
- Structured, non-accusatory interviews; PEACE model
- Corroborate statements against documentary/e-evidence
- Findings, Loss Quantification & Legal Readiness
- What happened, how, who benefited, control failures
- Quantified losses, disgorgement, recovery avenues (insurer, civil/criminal)
- Remediation roadmap with prioritized control fixes
- Remediation & Monitoring
- Control redesign (SoD, maker-checker, vendor onboarding, payment controls)
- Culture & training, whistleblower program refresh
- Analytics-based continuous monitoring
Tools & Technologies We Use
- Data ETL & Analytics: SQL, Python, IDEA/ACL, Power BI
- E-Discovery & Email Review: Relativity/Reveal-class platforms, M365 eDiscovery
- Digital Forensics: EnCase/FTK/Cellebrite-class tools, log forensics, memory capture
- Graph & Link Analysis: Entity resolution across PAN/GSTIN, phones, bank a/cs
Key Deliverables You Receive
- Investigation Plan & Protocols (including legal hold)
- Evidence Register & Chain-of-Custody Logs (hash reports for images)
- Exception & Risk Maps (dashboards of high-risk vendors, users, journals)
- Flow-of-Funds Charts (source → layering → destination)
- Findings Report (facts, evidence exhibits, loss quantification)
- Board/Regulator Pack (clear, non-technical summaries)
- Remediation Blueprint (quick wins + structural controls)
- Affidavits/Expert Support (when engaged by counsel)
Legal & Regulatory Sensitivities (India-focused)
- Companies Act, 2013 (books & records, auditor interactions)
- Prevention of Corruption Act, PMLA, Benami law (where applicable)
- IT Act, 2000 & data privacy (lawful acquisition, minimal exposure)
- Indian Evidence Act (admissibility, integrity of e-evidence)
- Sectoral: SEBI (LODR), RBI/NPCI guidelines (as relevant)
Important: We coordinate with your legal counsel to preserve privilege and ensure actions align with employment law, data protection, and due process.
Common Red Flags We Detect Early
- Round-amount journals near period-end; frequent manual overrides
- Sequential or duplicate invoices; identical bank accounts across vendors
- Weekend/late-night postings; excessive “urgent” payments
- Mismatched addresses/phones across vendor–employee masters
- Rapid vendor creation without KYC; repeated GRNs without PO
- Unusual credit notes/returns; abnormal scrap/write-offs
Control Enhancements We Typically Recommend
- Procure-to-Pay: Vendor KYC, negative-list screening, bank a/c verification, 3-way match hard stops
- Order-to-Cash: Credit limits, returns analytics, write-off approvals
- Treasury: Dual authorization, callback controls, beneficiary cooling periods
- HR & Payroll: HRMS–ERP reconciliation, ghost employee checks, SoD
- IT & Access: RBAC, log monitoring, SIEM alerts, joiner-mover-leaver controls
- Governance: Revamped whistleblower mechanism, investigation SOP, annual fraud risk assessment
Industry Modules
- Manufacturing & EPC: inventory/shrinkage, contractor collusion
- Retail & E-commerce: returns abuse, coupon fraud, BEC diversions
- Healthcare/Pharma: samples, clinical trial spends, distributor claims
- FinServ/FinTech: KYC gaps, mule networks, chargeback rings
- Real Estate/Infra: bid-rigging, change orders, subcontracting
Engagement Models with Nexgenca
- Rapid Response (Incident): immediate triage, data freeze, payment hold design
- Targeted Review: specific process/entity/timeframe deep-dive
- Enterprise Fraud Risk Assessment: heat-map + control redesign
- Continuous Monitoring: analytics-led ongoing surveillance
What We Don’t Do
- Illegal surveillance or “hacking”
- Covert recordings in breach of law/policy
- Actions that jeopardize evidence admissibility or employee due process
Why Nexgenca?
- Court-defensible approach with meticulous chain-of-custody
- Tech-first analytics to spot patterns humans miss
- Board-ready storytelling—concise, visual, action-oriented
- Collaborative with counsel to preserve privilege and strategy
- From truth to transformation: we don’t just find fraud—we help fix the system
Statutory audits opine on financial statements; forensic audits prove or disprove allegations, quantify loss, and are evidence-centric for legal use.
Communication is need-to-know. We coordinate with HR/Legal to avoid tipping-off suspects and to ensure due process.
Yes—when engaged via your counsel, our work product can be structured to attract privilege (subject to law).
We perform forensic imaging, log preservation, and email/chat discovery with hash-verified integrity to maintain admissibility.
Yes, using structured methods (e.g., PEACE). Interviews occur after we have documentary/e-evidence to corroborate.
We quantify losses, map beneficiary trails, and support insurer notifications, civil claims, or criminal complaints with exhibits.
When instructed by the client/counsel, we prepare regulator-ready or FIR-ready packs and can brief enforcement teams.
ERP/accounting data, bank statements, invoices/POs/GRNs, payroll, email/log access, and relevant devices for imaging.
We brief the audit committee/board, maintain strict independence, and ring-fence the investigation team to avoid interference.
Yes. We design targeted holds (payments, users, vendors) to limit disruption while protecting evidence.
No. We use read-only imaging and scheduled data pulls; users usually experience minimal impact.
Tight access controls, NDA’d teams, encrypted evidence vaults, and documented chain-of-custody from collection to archive.
An executive report with facts, quantified loss, implicated parties, control gaps, recovery options, and a prioritized remediation plan.
Absolutely—analytics rules, alerts, dashboards, and SOPs for ongoing surveillance.
Yes—fraud awareness, red-flag spotting, interviewing basics, and controls refresh workshops.