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In forensic auditing, the process typically involves systematic steps that are designed to ensure a thorough and accurate examination of financial data. The correct answer, which includes data collection, data preparation, data analysis, and reporting, outlines a comprehensive approach.

Data collection is the initial step where relevant information and evidence are gathered from various sources, which is crucial in establishing the context of the audit. Following this, data preparation involves organizing and formatting the data to make it suitable for analysis. This step is important as it ensures that the data is clean and structured, facilitating accurate analysis.

Data analysis is the next critical step, where auditors apply various analytical techniques to identify anomalies, trends, or patterns that may indicate fraudulent activities or financial discrepancies. This step is essential for drawing meaningful conclusions from the data collected.

Finally, reporting is where the findings of the audit are documented and communicated to stakeholders. This is a key component of forensic auditing as it provides a clear and detailed account of the evidence gathered, the analysis performed, and the conclusions drawn, which may have legal implications.

The other choices either exclude vital steps or misrepresent the purpose of forensic auditing. For instance, omitting data analysis would prevent the auditor from deriving insights from the collected data, and just reporting without analysis would