17-60 LO6 Describe forensic accounting and explain how it differs from auditing.

Forensic accounting is a detailed investigation when fraud has already been found or suspected.
It focuses on identifying the person who perpetrated the fraud and get them to confess. It gathers
the evidence to support the legal action to be taken against the person that is accused of
committing the fraud by identifying the fraud, the damages caused by the fraud, and compiling
both factual and testimonial evidence of the fraud. Forensic accounting’s main emphasis is on
interviewing the perpetrator. Audits rely on sampling to determine if there are material
misstatements in the financial statements of the company/organization. Auditing is to find if
there is fraud within the company, whereas forensic accounting is used to investigate and gather
evidence of the fraud for legal action.

17-62 LO7 What factors have driven the demand for sustainability reporting? Refer to
Exhibit 17.20 and describe the standards that exist for sustainability reporting and assurance.

The factors that have driven the demand for sustainability reporting are; investor interest;
socially responsible investment funds; and the Dow Jones sustainability index. Because of this
more companies have the company’s sustainability reports on their websites.

The standards that exist for sustainability reporting and assurance are;

 Global Reporting Initiative Sustainability Reporting Guidelines G3 and G4) – Assists

companies in determining how and what to report in terms of their sustainability planning
and performance. This framework allows for a great deal of variability in the nature and
extent of reporting across organizations. G4, which was issued in 2013, asks
organizations to state their practice on external assurance as part of their report. Such
assurance is not required, but recommended.
 AA1000 (AccountAbility’s AA1000) – Is a series of principle-based standards to help
organizations to become more accountable, responsible and sustainable. They address
issues affecting governance, business models and organizational strategy, as well as
providing operational guidance on sustainability assurance and stakeholder engagement.
The series of standards include guidance for both reporting organizations and assurance
providers.
 AICPA, PCAOB, and IAASB general standards for providing assurance and attestation
services can be adapted to the context of sustainability reporting, but such standards do
not address sustainability specifically. As an example, the International Standard on
Assurance Engagements 3000 (Revised) provides guidance for the provision of assurance
over engagements other than audits or reviews of historical financial information.