Crime Scene Investigation (CSI) forensics deliver a scientific finality that makes it the most superior method for legal processes. Forensic auditing is the golden standard for investigations into finances. This is how to forensically audit your finances and assets like a pro.
What is Forensic Auditing?
The field of “forensic auditing” is the highest level of financial assessment that is required by a court of law. Nations and corporations may use different types of accounting standards with varying degrees of precision. Forensic auditing will be able to clearly document the “chain of custody” or “trail of money” with a timeline for all financial transactions.
Police, government and pseudo-governmental agencies may consider forensic auditing for insurance claims, personal injury or royalty audits. Follow the forensic list that follows for your personal fine-toothed comb audit:
- Who
- What
- Why
- Where
- When
- How
Your personal audit will figuratively “dust” your finances to deliver clear numbers for each transaction.
Past Performance is Not Indicative of Future Results
When you forensically audit your finances like a pro, you are preparing them for acceptance by a court of law. This is like Spring cleaning ensuring that all legal, regulatory, tax and accounting requirements have been fulfilled. All financial portfolios, estates and trusts should go through this process from time to time.
For example, real estate chain of custody determines whether all of the proper legal records were filed along with the removal of all liens and encumbrances. Can you prove that you have all legal rights to the land? Forensic auditing is like receiving a detailed maintenance report for the used car you just bought. It breeds confidence.
The first step to a forensic asset audit is considering past performance. Nowadays, there is historical data on all asset classes. How did your assets perform during the past couple of years?
As crazy as it may sound, some people NEVER balance their checkbooks. A forensic audit requires you to write down your monthly income and monthly expenses. Does your bill for groceries, clothing and housing change in certain months? Where can you cut back, if needed? What is your “disposable income?” Write everything down like a professional.
Compare Present Growth Rate to Indices
How do you feel about your present career path? It is wise to write down what you accomplished in the past year – new skills, title or projects. Then, write down what you expect for the next year.
Did you receive a raise? Now is a good time to compare your living expenses and loans (debt) to your income (credit). Did either increase or decrease dramatically?
Now, compare your asset portfolio to the primary index for your nation. This will help you gauge how you are doing compared to the average citizen. Did you outperform or under-perform this index?
What Asset Will Deliver the Best Future Profits?
How will you achieve your future goals? Many of the best employers will have regular performance reviews to both assess your past and discuss your future hopes. What skills do you want to add? Ask your supervisor if there is some special trait or job that he needs completed. Companies like employees with this “Can-Do” attitude.
Make a list of ten (10) assets that you think may outperform the market in the coming year. Compare the prices to their returns to find the best buys.
Have the Economic Fundamentals Changed?
Every day, something changes. By forensically auditing your finances like a professional, you make sure you know the exact details. Next, you can make better decisions based on these financial figures. Those who are well-informed are well-armed to conquer any challenges before them. Now that you are ready to forensically audit your finances, visit Randstad to get started.