Top Forensic Audit Case Study Questions: Learnings & Real-World Scenarios
Introduction to Forensic Audit Case Studies
Preparing for a forensic audit interview? Then you must be ready for more than just theory. Today, recruiters want to know how well you can solve real forensic audit case questions—not just recite definitions.
In this blog, we’ll walk you through the most common case-based scenarios asked in interviews, how to spot red flags, and the smart way to approach each question. If you’re aiming for a Big 4 role or a forensic audit job, this guide is your cheat sheet to success.
Why Case-Based Questions Matter in Forensic Audit Interviews
When it comes to cracking a forensic audit interview, theory is not enough. Companies want to test your thinking, not just your memory. That’s why forensic audit case questions are now a key part of the selection process.
These questions check:
How you approach fraud scenarios
Your understanding of red flags
Whether you can connect evidence with action
The goal isn’t to catch you off guard—it’s to see how you think like an investigator. Your ability to analyze situations, ask the right questions, and use audit tools is what sets you apart.
If you’re preparing for roles in Big 4 firms, internal audit teams, or forensic consulting, mastering forensic audit case questions is a must. It shows you’re ready for the real world—not just the classroom.
Sample Case Questions & Approach to Solve Them
Case Study Question 1: Ghost Vendor Scheme
You discover that payments are being made to a vendor with minimal transaction history and inconsistent delivery details. The vendor exists in the master database but has no website, contact number, or traceable office. How would you investigate and confirm if it’s a ghost vendor?
Answer: Steps to Investigate:
Vendor Verification:
- Check KYC documents – PAN, GST, bank account name – and match with government databases.
- Search for online presence (website, business listings).
- Verify address physically or through third-party agents.
Transaction Review:
- Analyze PO, invoice, GRN, and payment trail.
- See if the vendor raised invoices without delivery or GRNs were backdated/falsified.
- Check if invoice amounts just fall below approval thresholds.
Employee Linkage:
- Investigate whether the vendor’s bank account is linked to an employee or related
party (name similarity, phone number, IP log).
Control Weaknesses:
- Identify whether vendor onboarding bypassed standard procedures.
Conclusion:
If evidence confirms no genuine goods/services were delivered and vendor info is fabricated or linked to employees — it’s a ghost vendor fraud.
Case Study Question 2: Bid Rigging in Quotation Process
A forensic review of procurement found that in multiple tenders, three vendors consistently bid and one always wins. The price difference between the winning and losing bids is minimal. What could be happening and how do you validate if this is a bid-rigging scheme?
Answer:
Red Flags:
- Rotation of winning vendors.
- Losing vendors quoting unrealistically high prices.
- Similar language, fonts, or format in quotation documents (hinting collusion).
- Same IP address/email domain during bid submissions.
Investigation Steps:
Quotation Forensics:
- Use metadata analysis to check if multiple quotations originated from the same device or person.
Vendor Relationship Analysis:
- Look for common directors, contact details, GST location codes.
Tender Patterns:
- Check frequency of wins, price deviation trends, and any last-minute changes in eligibility criteria.
Internal Collusion:
- Identify if procurement team members have personal ties or undue influence over the selection.
Conclusion:
Consistent bid patterns with commonalities in documentation and pricing indicate cartel behavior — a classic case of bid-rigging.
Case Study Question 3: Suspense Account Build-Up
A suspense account in the balance sheet has grown to ₹1.2 crore over the past 6 months, with little documentation. The finance team says it’s due to system mapping issues post ERP migration. What are your next steps?
Answer:
Steps to Investigate Suspense Account Entries
Investigating a suspense account is a critical part of any forensic audit. Here’s a simple and structured way to approach it:
Transaction Trail
Identify all transactions that were credited or debited to the suspense account.
Look for unusual patterns, such as repeated entries from the same user, source module, or transaction type.
Root Cause Analysis
Check the ERP migration logs to see if the suspense account was used as a plug entry during system transition.
Review how opening balances were mapped — were any accounts incorrectly routed to suspense?
Reconciliation Check
Attempt to match suspense entries to known entities like vendors, customers, or intercompany accounts.
Use supporting documents to validate links and flag unmatched entries.
Aging Analysis
Categorize entries based on age and source system.
Highlight or escalate entries that are older than 30 days.
Conclusion:
An unexplained buildup could indicate poor financial hygiene or potential misappropriation. Escalation and immediate clearance instructions should follow.
Case Study Question 4: Investigating a ₹500 Crore Loss
A company has reported an unexpected loss of ₹500 crores in its annual financials. As a forensic auditor, how would you investigate this loss? What steps will you take to identify the root cause and potential fraud, if any?
Answer:
When dealing with a significant financial loss, a structured and methodical forensic investigation is critical. Here’s how to approach it step-by-step:
Step 1: Understand the Nature of the Loss
Start by breaking down the ₹500 crore loss:
Is it due to operational inefficiencies?
Asset impairment or valuation drop?
Financial transactions or write-offs?
Inventory misstatements?
Any one-time events or exceptional charges?
Step 2: Analyze Financial Statements
Compare the current period’s financials with prior years. Focus on:
Spike in bad debts, provisions, or unexpected expenses
Revenue anomalies — early recognition or inflated income
Sudden asset write-downs or impairments
Step 3: Transactional Testing
Deep-dive into high-value or irregular transactions close to the loss period:
Are they genuine and properly documented?
Any related party involvement?
Unusual manual journal entries or round-figure invoices?
Step 4: Vendor & Customer Review
Run background checks and forensic profiling on:
Vendors: Shell companies, over-invoicing, duplicate POs
Customers: Sudden revenue reversals, credit notes after year-end
Step 5: Cash Flow Analysis
Follow the money:
Scrutinize bank statements, inter-company fund transfers, and foreign remittances
Identify signs of round-tripping, fund diversion, or irregular cash movements
Step 6: Employee / Insider Analysis
Interview key personnel in:
Finance, procurement, and sales
Check for access override, ERP logs, or suspicious file activity
Evaluate pressure or incentive systems linked to performance
Step 7: Digital Forensics & Email Review
Use forensic tools to:
Recover deleted emails, files, and audit logs
Search for keywords like “off the books”, “arrangement”, “don’t copy finance”
Review internal chats and communications around the time of the loss
Conclusion:
A loss of ₹500 crores is likely a mix of operational inefficiencies, accounting misstatements, or fraud. A combination of financial analytics, transactional review, digital forensics, and interviews will help identify the root cause and responsible parties.
Case Study Question 5: Window Dressing for Profitability
Assume you’re the CFO of a company under pressure to show improved profitability to attract investors. What accounting treatments or adjustments (legal or borderline unethical) might be used to window dress the financial statements? Discuss this as a case study from a forensic investigation standpoint.
Answer:
Window dressing refers to the manipulation of financial statements to make a company look healthier than it actually is. Below are some of the most common techniques used:
1. Revenue Manipulation
Companies may inflate revenue figures by:
Early revenue recognition: Booking revenue based on dispatch or purchase order, instead of actual delivery or service completion.
Channel stuffing: Forcing excess goods into distributor channels with extended credit terms to artificially boost sales figures.
2. Expense Deferral
Shifting expenses to future periods to enhance current profits:
Capitalizing operational costs such as routine repairs, R&D, or software upgrades that should be expensed.
Deferring bonuses or marketing expenses to the next quarter to reduce immediate outflows.
3. Provision Reversal or Understatement
Provisions are manipulated to improve profitability:
Reducing provisions for doubtful debts or obsolete inventory without any supporting analysis.
Reversing past provisions to inflate earnings when there is no real improvement in risk.
4. Non-Recurring Gains
Including one-time gains in regular income:
Selling unused assets and showing the gain under operating profits.
Revaluing investments to market value and booking unrealized gains in the profit and loss account.
5. Related Party Transactions
Used to create the illusion of healthy operations:
Routing fictitious sales through group companies to inflate revenue.
Inflating margins via inter-company transactions and aggressive transfer pricing adjustments.
6. Inventory Manipulation
Overstating closing inventory directly boosts reported profits:
Exaggerating quantities on hand during stock counts.
Using inflated valuation methods without considering Net Realizable Value (NRV), especially for slow-moving or obsolete stock.
From a Forensic Perspective:
As a forensic investigator, you would:
- Validate revenue cutoff and matching principles.
- Review CAPEX additions for disguised OPEX.
- Analyze journal entries, especially at quarter/year-end.
- Check related party disclosures, identify shell entities.
- Reconcile inventory physically and against historical trends.
Conclusion:
While some window dressing techniques fall within accounting flexibility, repeated or intentional use to mislead stakeholders is fraudulent. A forensic review focuses on intent, pattern, materiality, and evidence of concealment.
Conclusion
If you want to build a strong career in forensic audit, learning how to solve forensic audit case questions is a must. These questions help you think like an investigator—not just an accountant.
From fake sales and vendor fraud to inventory tricks, each case teaches you how to spot red flags and understand what really went wrong. The more you practice, the more confident you’ll be in interviews and real audit situations.
Remember, in forensic audit, it’s not just about checking numbers—it’s about finding the truth behind them.
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