This paper describes a fault identification algorithm for combinational and full-scan sequential circuits called FLOSPAT - Fault Localization by Sensitized Path Transformation [1,2]. The goal of fault identification is to localize a fault to the fewest possible gates and to determine the Boolean functions realized by those gates. Instead of choosing a fault model, FLOSPAT uses fault-independent sensitized path tracing  to localize functional deviations. Sensitized path transformation is used to adaptively generate test vectors which improve the diagnostic resolution. The output of FLOSPAT is used for physical defect diagnosis by cross-referencing gate-level defect dictionaries generated by the contamination-defect-fault mapper CODEF [4,5,6].