IBC empowers the Resolution Professional to seek an Audit to detect Preferential, Fraudulent, Defrauding Transactions done by directors and Promoters of Corporate Debtors.
A Forensic/ Transaction Audit under IBC, 2016 is conducted to unearth the Preferential, Undervalued, Fraudulent or Wrongful and Extortionate transactions carried on by Corporate Debtor within a period of 2 years preceding the Insolvency Commencement Date.
Sections 43 to 51 and Section 66 of the Code stipulate that RPs have to file avoidance of specified transactions with the Adjudicating Authority, including transactions which are preferential, undervalued and/or extortionate in nature, and fraudulent or wrongful transactions carried out with an intent to defraud creditors within a period of two years preceding the insolvency commencement date.
The Forensic audit requires the expertise of not only accounting and auditing procedures but also expert knowledge regarding the legal framework.
We use forensic methodologies such as data analytics, document review, market intelligence, etc., to help RPs investigate such transactions which are often hidden under multiple complex layers and conduct background checks on the entities involved to help identify any undisclosed relationship with the corporate debtor.