BCom 3rd Year Investigation Notes Study Material
BCom Investigation in Auditing Notes Study Material
MEANING
Investigation is an examination of accounts and records of a business concern
with some special purpose in view. In most of the cases the purpose of such an
enquiry is to know as actually as possible the financial position of the concern so
that an opinion can be formed and action taken accordingly. Thus, it is a sort of
special audit with a particular object in view. It is actually conducted in addition
to the regular audit of accounts and is, thus, a scrutiny of accounts pertaining to
several years whereas an audit relates only to a particular period, more specially
a financial year. This is the major point of difference between the two. But it has
to be remembered that the investigation of accounts of a joint-stock company is
not legally compulsory as is the case with audit.
Taylor and Perry have rightly defined investigation as given below:
“Investigation involves inquiry into facts behind the books and accounts, into the
technical, financial and economic position of the business or organisation.”
AUDIT VERSUS INVESTIGATION
(DIFFERENCE BETWEEN AUDIT AND INVESTIGATION)
Investigation differs substantially from an audit assignment. Audit aims at
collection of sufficient appropriate audit evidence to enable the auditor to form a
judgement and express an opinion on the financial statements or other data
under examination. An investigation, on the other hand, requires special in-depth
examination of the particular records or transaction with the objective of
establishing a part or happening or assessing a particular situation. The scope of
audit is broad based and general in nature whereas investigation is narrow and
specific.(BCom Investigation in Auditing Notes Study Material)
The approach to an investigation is different from that followed in an audit. An
investigation involves a more detailed examination of the selected areas than
what is required in an audit. An investigation seeks substantive and in some case
even conclusive evidence as compared to audit which mainly relies on
persuasive evidence.(BCom Investigation in Auditing Notes Study Material)
An investigator does not accept a stated fact as correct until it is substantiated.
An auditor, in the absence of suspicious circumstances, relies on stated facts or
figures. An auditor has to see whether the method of valuation and other
accounting policies have been properly made in the financial statements or not.
An investigator, however, is not by accounting conventions, policies and
disclosure requirements. An auditor does not suspect unless circumstances are
, there to arouse suspicion, while an investigator approaches the work with a
frame of mind to suspect, verify and satisfy.
ESSENTIALS FOR INVESTIGATION
An investigator should keep the following points in view during the course of
investigation:
1. He should keep himself free from the influence of Directors and Managers of
the business.(BCom Investigation in Auditing Notes Study Material)
2. He should familiarise himself with all the important details about a business
before the commencement of his work.
3. If necessary, he should seek the assistance of technical experts during the
course of his enquiry.(BCom Investigation Notes Study Material)
4. He should confine to himself the purpose of investigation and keep details in
regard thereto quite secret.
SCOPE OF INVESTIGATION
The scope of investigation is quite different from that of audit. Much depends
upon the terms of investigation. Thus, its scope may be more extensive or limited
depending upon the circumstances of the case. The enquiry under investigation
may go beyond the books of accounts of a business concern. It may cover
matters of technical and financial nature. An auditor through investigation tries to
establish a relationship between the causes and the findings. Thus, investigation
means an enquiry into the details so that actual facts can be analysed with
causes.(BCom Investigation in Auditing Notes Study Material)
When an investigator is appointed by his client, he should obtain in writing all the
necessary instructions from him so as to decide for himself the scope of work to
be performed in pursuance of a special object. If any limitations are placed on his
work, he should obtain them in writing so that he may exactly determine the
scope and nature of his duties.(BCom Investigation Notes Study Material)
STEPS IN INVESTIGATION (PROCESS OF INVESTIGATION)
As investigation involves a variety of situations, it is not possible to my own
standardised procedure. However, usually, an investigation requires the following
steps in order of sequence:
Determination of objectives and establishment of scope of investigation: At the
stage of acceptance of the assignment, the investigator should be absolutely
clear about what is sought to be achieved by the investigation. If instructions
from the client leave matters vague and non-specific, it would be proper for the
investigator to have the matters discussed and obtain clearly written instructions
covering the object and the scope of investigations and the issues incidental
thereto.(BCom Investigation in Auditing Notes Study Material)
BCom Investigation in Auditing Notes Study Material
MEANING
Investigation is an examination of accounts and records of a business concern
with some special purpose in view. In most of the cases the purpose of such an
enquiry is to know as actually as possible the financial position of the concern so
that an opinion can be formed and action taken accordingly. Thus, it is a sort of
special audit with a particular object in view. It is actually conducted in addition
to the regular audit of accounts and is, thus, a scrutiny of accounts pertaining to
several years whereas an audit relates only to a particular period, more specially
a financial year. This is the major point of difference between the two. But it has
to be remembered that the investigation of accounts of a joint-stock company is
not legally compulsory as is the case with audit.
Taylor and Perry have rightly defined investigation as given below:
“Investigation involves inquiry into facts behind the books and accounts, into the
technical, financial and economic position of the business or organisation.”
AUDIT VERSUS INVESTIGATION
(DIFFERENCE BETWEEN AUDIT AND INVESTIGATION)
Investigation differs substantially from an audit assignment. Audit aims at
collection of sufficient appropriate audit evidence to enable the auditor to form a
judgement and express an opinion on the financial statements or other data
under examination. An investigation, on the other hand, requires special in-depth
examination of the particular records or transaction with the objective of
establishing a part or happening or assessing a particular situation. The scope of
audit is broad based and general in nature whereas investigation is narrow and
specific.(BCom Investigation in Auditing Notes Study Material)
The approach to an investigation is different from that followed in an audit. An
investigation involves a more detailed examination of the selected areas than
what is required in an audit. An investigation seeks substantive and in some case
even conclusive evidence as compared to audit which mainly relies on
persuasive evidence.(BCom Investigation in Auditing Notes Study Material)
An investigator does not accept a stated fact as correct until it is substantiated.
An auditor, in the absence of suspicious circumstances, relies on stated facts or
figures. An auditor has to see whether the method of valuation and other
accounting policies have been properly made in the financial statements or not.
An investigator, however, is not by accounting conventions, policies and
disclosure requirements. An auditor does not suspect unless circumstances are
, there to arouse suspicion, while an investigator approaches the work with a
frame of mind to suspect, verify and satisfy.
ESSENTIALS FOR INVESTIGATION
An investigator should keep the following points in view during the course of
investigation:
1. He should keep himself free from the influence of Directors and Managers of
the business.(BCom Investigation in Auditing Notes Study Material)
2. He should familiarise himself with all the important details about a business
before the commencement of his work.
3. If necessary, he should seek the assistance of technical experts during the
course of his enquiry.(BCom Investigation Notes Study Material)
4. He should confine to himself the purpose of investigation and keep details in
regard thereto quite secret.
SCOPE OF INVESTIGATION
The scope of investigation is quite different from that of audit. Much depends
upon the terms of investigation. Thus, its scope may be more extensive or limited
depending upon the circumstances of the case. The enquiry under investigation
may go beyond the books of accounts of a business concern. It may cover
matters of technical and financial nature. An auditor through investigation tries to
establish a relationship between the causes and the findings. Thus, investigation
means an enquiry into the details so that actual facts can be analysed with
causes.(BCom Investigation in Auditing Notes Study Material)
When an investigator is appointed by his client, he should obtain in writing all the
necessary instructions from him so as to decide for himself the scope of work to
be performed in pursuance of a special object. If any limitations are placed on his
work, he should obtain them in writing so that he may exactly determine the
scope and nature of his duties.(BCom Investigation Notes Study Material)
STEPS IN INVESTIGATION (PROCESS OF INVESTIGATION)
As investigation involves a variety of situations, it is not possible to my own
standardised procedure. However, usually, an investigation requires the following
steps in order of sequence:
Determination of objectives and establishment of scope of investigation: At the
stage of acceptance of the assignment, the investigator should be absolutely
clear about what is sought to be achieved by the investigation. If instructions
from the client leave matters vague and non-specific, it would be proper for the
investigator to have the matters discussed and obtain clearly written instructions
covering the object and the scope of investigations and the issues incidental
thereto.(BCom Investigation in Auditing Notes Study Material)
