In what situation might an organization conduct a forensic audit?

A forensic audit is specifically designed to investigate and analyze financial records when there is suspicion of fraudulent activity. This process involves a detailed examination of financial information and transactions to identify any discrepancies, misappropriations, or non-compliance with regulations. In cases where fraud is suspected within financial processes, conducting a forensic audit becomes essential to gather evidence, understand the extent of any wrongdoing, and support potential legal action.

In contrast, the other options relate to routine operational scenarios rather than situations that warrant a forensic investigation. Requesting overtime pay and preparing for a routine financial review typically do not involve the level of scrutiny that a forensic audit entails, nor do they inherently involve allegations of fraud. Considering budget increases is also a standard operational procedure that does not necessitate forensic analysis. Therefore, the context of fraud suspicion is what distinctly justifies the need for a forensic audit.