Investigation of Unusual Transactions
The transactions, entries, or payments in question are examined, the path of their approval, execution, and recording is analyzed, and they are compared against the relevant documents, authorities, and policies.
Advisory
Forensic Accounting and Financial Investigations
HHAB helps entities, boards of directors, audit committees, and legal advisers investigate financial facts, trace the movement of funds, analyze unusual transactions, measure their impacts, and prepare professional reports that set out what the data supports and what remains unresolved. The work begins with the specific financial question; the accounting and banking records are then linked to the contracts, invoices, approvals, correspondence, and related parties, leading to findings and accounting conclusions that can be traced to their sources.
Indicators of Need for the Service
When Does an Entity Need Forensic Accounting?
The service may be appropriate where one or more of the following indicators is present:
- Unexplained differences between the accounting records and the bank statements.
- Unusual payments, transfers, or journal entries.
- Suspected overstepping of authorities or conflicts of interest.
- Related party transactions that need independent, objective analysis.
- A dispute between partners or owners over the accounts, profits, drawings, or obligations.
- A need to trace funds across several accounts, companies, or parties.
- A claim of financial loss or damage that needs to be computed and documented.
- A report or computation prepared by another party that needs technical review.
- An internal report or a financial indicator that needs to be investigated before administrative or legal action is taken.
What the Service Covers
From Investigating a Single Transaction to Reconstructing the Facts in Full
The scope of each engagement is designed around the incident and the questions under investigation, and the final scope and deliverables are set in the engagement letter.
Tracing the Movement of Funds
Financial flows are traced across accounts, entities, and parties, and transfers are linked to the records, contracts, invoices, and beneficiaries whenever sufficient, linkable data is available.
Reconstruction of the Financial Facts
A chronology of the relevant transactions, decisions, correspondence, and events is prepared, helping establish what happened, when it happened, and how it was reflected in the records.
Analysis of Related Party Transactions
The nature of the transactions, their basis, their approvals, and their financial impacts are examined, and any inconsistencies, missing documentation, or overstepping of authorities apparent from the data is identified.
Disputes Between Partners and Owners
The accounts, distributions, drawings, financing, expenses, and financial obligations in dispute are analyzed, and the supported amounts are separated from the amounts that are contested or unsupported.
Quantification of Losses and Financial Impacts
The financial impact is computed on a defined basis, with the data, assumptions, periods, scenarios, and limitations that may affect the result made clear.
Review of Reports and Computations Prepared by Others
The source of the data, the methodology, the assumptions, the calculations, and the consistency of the conclusions with the available documents are examined, without assuming that the report is correct or incorrect before the procedures are completed.
Preparation of Technical Reports
Accounting reports are prepared to help the engaging party or its legal adviser understand the facts and the computations and reach a decision. These reports do not constitute a legal opinion or a guarantee that they will be accepted or relied upon before any authority.
Professional Framework for Execution
Classifying the Engagement Before Acceptance Determines Its Standard and the Form of Its Report
Not all financial investigation work falls under a single professional standard. HHAB therefore classifies the nature of each engagement before accepting it, and the engagement letter sets the appropriate framework according to the purpose of the assignment, the questions to be answered, and the intended users of the report.
The Non-Assurance Advisory Engagement
This is the default framework where the assignment requires investigating the facts, analyzing transactions, testing explanations, computing financial impacts, and preparing accounting findings and conclusions. This engagement is not an audit or a review of financial statements, and it includes no audit opinion and no assurance conclusion.
Agreed-Upon Procedures
These are performed under International Standard on Related Services 4400, Agreed-Upon Procedures Engagements, as endorsed in Saudi Arabia, where the procedures to be performed are specified and agreed in advance, and the report is confined to describing the procedures and the factual findings arising from them, without any opinion or assurance conclusion. The users of the report are responsible for drawing their own conclusions from the findings presented.
The Assurance Engagement
An assurance engagement may be appropriate in specific cases under International Standard on Assurance Engagements 3000 as endorsed in Saudi Arabia, where there is a subject matter capable of measurement or evaluation, suitable and disclosed criteria, evidence that can be gathered, and an actual need for a limited or reasonable assurance conclusion. Acceptance of this type of engagement is subject to an assessment independent of the advisory investigation services.
The Forensic Accounting Services Standard
Compliance with the standard Advisory Services: Engagements to Provide Forensic Accounting Services, as endorsed in Saudi Arabia, is attributed only to engagements in which the conditions of its scope are met. An assignment is not described as performed under that standard merely because its subject is connected with a dispute or because a legal adviser may use it.
Who This Service Is For
Parties That May Need an Independent Accounting Investigation
The service is provided to parties that need an objective understanding of an incident, a transaction, or a financial impact, whether within the entity or in the context of a dispute or a legal assessment.
01
Boards of Directors and Audit Committees
Where an objective investigation is needed into an incident, a transaction, or a financial indicator that requires oversight at the governance level.
02
Executive and Finance Management
To understand differences, unusual dealings, the path of funds, or the financial impact of a specific incident.
03
Internal Audit and Compliance Departments
To support the investigation of a report or a possible violation, or the testing of a specific financial explanation.
04
Companies and Commercial Groups
Where there are related party transactions, disputes between partners, or financial losses and damages that need analysis and documentation.
05
Lawyers and Law Firms
To obtain accounting analysis that supports understanding of the facts, documents, and computations connected with a matter concerning one of their clients, without this constituting a legal opinion.
Methodology
From the Financial Question to the Report
A disciplined path that converts the matter in question into examinable questions and traceable results.
1
Defining the Matter and the Questions
The general matter is converted into examinable accounting questions, and the period, parties, entities, accounts, data sources, and intended users of the report are defined.
2
Assessing the Scope and the Data
The volume and quality of the data, the systems used, the available documents, the potential limitations, and the need for interviews or other specialists are assessed.
3
Gathering and Indexing the Information
The documents and records within scope are classified, and each document is linked to its source, date, subject, and the matter it supports.
4
Reconstructing and Analyzing the Facts
The chronology is prepared, financial movements are traced, reconciliations and computations are performed, and patterns, exceptions, and possible explanations are analyzed.
5
Preparing the Findings and the Report
The report separates the supported facts, the professional analysis, the accounting conclusions, and the unresolved matters, with the assumptions, the limitations, and the effect of missing or conflicting information made clear.
Deliverables
Potential Deliverables of the Engagement
The final deliverables are set in the engagement letter and may include the following:
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A scope document and work plan
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A list of the information and documents required
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An index of the documents and data covered by the examination
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A chronology of the facts and transactions
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Schedules of funds tracing, reconciliations, and differences
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A computation of losses or financial impacts and alternative scenarios
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A report of the findings and accounting conclusions
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A memorandum reviewing a report or computation prepared by another party
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An executive presentation of the results to management or the audit committee
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Control or procedural recommendations, where included in the scope
Deliverables vary with the nature of the engagement, and the inclusion of an item in this list does not mean it will be required or appropriate in every assignment.
Service and Report Boundaries
Results Tied to the Scope and the Information, With Clearly Stated Boundaries
The results of the engagement depend on the scope of the questions and the information made available to HHAB. Missing data, restricted access, or records held outside the systems covered may affect the nature of the procedures and the results that are possible.
No Guarantee of Outcomes
The fact that a transaction or an indicator was not detected does not mean that none exists, and HHAB gives no guarantee of detecting all violations, recovering funds, proving a claim, or achieving a specific legal or commercial outcome.
Legal Characterization Outside the Scope
The report does not determine that a crime has occurred, that intent is established, or that legal liability exists, and it does not adjudicate a dispute. The role of HHAB is confined to presenting the facts, the analysis, and the accounting conclusions, while legal characterizations and judicial decisions remain the responsibility of the authorized bodies.
Disclosure of the Capacity of the Appointment
Where the engagement is performed for the benefit of a particular entity or party, the report states the capacity of the engaging party, the purpose of the report, and the intended users. The engagement is not presented as neutral judicial expertise appointed by an adjudicating body unless the appointment is in fact of that nature.
Conflict Assessment Before Acceptance
Every engagement is subject to an assessment of conflicts of interest, objectivity, and professional requirements before acceptance. HHAB may decline the assignment or adjust its scope where a threat arises that cannot be eliminated or reduced to an acceptable level, in particular where the party or the transactions under investigation are connected with a client whose financial statements HHAB audits.
Why HHAB
A Traceable Methodology and Experience in Complex Matters
A Licensed Saudi Professional Firm
HHAB is a Saudi professional firm licensed by the Saudi Organization for Chartered and Professional Accountants, and provides its services in accordance with the relevant professional and regulatory requirements.
A Traceable Methodology
The methodology is built on indexing the documents, reconstructing the chronology, tracing financial movements, performing reconciliations and computations, and linking every finding to the information that supports it.
Experience in Complex Financial Matters
The managing partner has prior professional experience at the Big Four global audit firms and in serving listed companies, spanning financial reporting, controls, and complex accounting and professional matters.
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HHAB is a Saudi professional firm licensed by the Saudi Organization for Chartered and Professional Accountants.
Reports that distinguish clearly between what the documents support, what results from professional analysis, what depends on assumptions, and what cannot be resolved in light of the available information.
FAQ
Frequently Asked Questions on Forensic Accounting and Financial Investigations
Must fraud be established before the investigation begins?
No. The assignment may begin from an indicator, an internal report, an unusual transaction, or a difference between records. Possible explanations are tested without assuming that fraud has occurred before the procedures are completed.
Does an HHAB report establish that fraud or embezzlement occurred?
The report presents the facts, documents, patterns, and accounting conclusions. Establishing the crime, the intent, or the legal liability remains subject to the assessment of the competent authorities.
What is the difference between forensic accounting and a financial statements audit?
A financial statements audit aims to express an opinion on the financial statements as a whole. Forensic accounting focuses on a specific incident, account, set of transactions, or defined questions, and does not provide an audit opinion.
Can the assignment be performed under the agreed-upon procedures standard?
Yes, where the procedures can be specified in advance and what is required is a report of factual findings only, under International Standard on Related Services 4400. Where the assignment requires an open-ended investigation and accounting conclusions, the non-assurance advisory engagement may be more appropriate. Details of this type of report are available on the Agreed-Upon Procedures Reports page of the website.
Can funds be traced across several accounts or companies?
Yes, whenever sufficient, linkable data is available. The analysis is affected by the completeness of the bank statements, the clarity of the parties and of the banking and accounting references, and the accessibility of the data of the different entities.
What happens when documents are missing or conflicting?
The missing documents, the conflicts, and their effect on the analysis are identified, and the unresolved matters and alternative results are set out where needed. Gaps are not filled with undisclosed assumptions.
Can a report prepared by another accountant or expert be reviewed?
Yes. The source of the data, the methodology, the assumptions, the computations, and the consistency of the results with the available documents can be examined, without assuming in advance that the report is correct or incorrect.
Can a lawyer use the report?
The report can be used as a technical input for understanding the facts and computations and supporting the study of the matter. It does not, however, constitute a legal opinion, and HHAB does not guarantee its acceptance, or reliance upon it, before any judicial or regulatory body.
How are the duration and fees of the engagement determined?
Duration and fees are set after assessing the questions, the financial period, the volume of data, the number of accounts and parties, the multiplicity of systems, the quality of the documents, the speed with which they are made available, and the need for interviews or complementary expertise.
Note: This content is general information and does not constitute accounting or legal advice on any specific incident or entity. Forensic accounting and financial investigation services are not an audit or review of financial statements, and they provide no level of assurance unless the engagement is independently classified under an appropriate professional standard and the engagement letter states so expressly. Results depend on the information available within the agreed scope, and HHAB does not guarantee the detection of all violations, the recovery of funds, or the achievement of a specific legal or commercial outcome. Management remains responsible for the decisions and actions taken on the basis of the results, and the legal adviser remains responsible for interpreting legal matters and determining how the report is used. Acceptance of every engagement is subject to an assessment of conflicts of interest and the relevant professional requirements.
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