New Delhi, Aug 12 (TIWN) The Digital Accounting and Assurance Board (DAAB) of the Institute of Chartered Accountants of India (ICAI) has proposed eight new Forensic Accounting and Investigation Standards (FAIS), which will be placed for final approval on August 13.

The ICAI had earlier issued 13 FAIS.  The new accounting standards prescribe strict measures to be followed by the forensic auditors while conducting forensic audit.  The new standards will render the existing forensic audits untenable, especially where the lenders have used ambiguous and inconclusive reports to classify borrower loan accounts as fraud.  The FAIS prescribes that the forensic auditor shall issue a precise and unambiguous report.  The report is also required to be backed by reliable evidence and relevant documents collected by the auditor, in line with the requirements of FAIS to support its conclusions. 

The FAIS further prescribes that the report shall not express an opinion or pass any judgement on guilt or innocence. 

The FAIS categorically mandates that the principles of natural justice needs to be met by conducting a discussion of the observations with the subject party and their views need to be suitably incorporated in the report.  It is to be noted that currently, there are no standards or guidelines prescribed by any regulator or authority to monitor or regulate the functions of forensic audit.  In the absence of such regulations, any and every self-acclaimed forensic audit expert/firm was appointed by the lenders to conduct forensic audit as per their own rules and procedures and present reports based on their own judgements.