AUDITING Vs INVESTIGATION:
Investigation is an enquiry into the accounts and records of a business concern for a special purpose,
say, to know the actual financial position of the concern or to know the real earning Capacity of the
business or to know the extent of fraud, if any. There are many differences between The two. They are :
Points of Difference Auditing Investigation
1. Objects The object is to find out It is undertaken to know the
whether balance sheet and essential facts about a matter
profit and loss account exhibit a under inquiry. It is done with
true and fair view of business. some special purpose of view.
2. Period It usually covers one accounting It may cover more than one
year. accounting year.
3. Conducted It is conducted for proprietors It is carried out on behalf of any
only. party interested in the matter.
4. Scope It is restricted to balance sheet It is wider in scope. It may be
and profit and loss account. carried out beyond balance
sheet.
5. Compulsion Audit is legally compulsory for It is voluntary. It is required
companies under certain circumstances
6. Time It may be conducted at the end It may be conducted at any time
of the year. in case of suspicion about any
transaction.
7. Report Form of report is prescribed. It Form of report is not
is presented to the prescribed. It is presented to
shareholders. the client.
8. Appointment Owners appoint the auditors. Even third party can appoint
an investigator.
9. Qualifications The statutory auditors must Even an employee preferably a
possess proper qualifications. chartered accountant may be
appointed as investigator.
10. Rework Re – audit is not generally Re - investigation may be
undertaken. undertaken.
Investigation is an enquiry into the accounts and records of a business concern for a special purpose,
say, to know the actual financial position of the concern or to know the real earning Capacity of the
business or to know the extent of fraud, if any. There are many differences between The two. They are :
Points of Difference Auditing Investigation
1. Objects The object is to find out It is undertaken to know the
whether balance sheet and essential facts about a matter
profit and loss account exhibit a under inquiry. It is done with
true and fair view of business. some special purpose of view.
2. Period It usually covers one accounting It may cover more than one
year. accounting year.
3. Conducted It is conducted for proprietors It is carried out on behalf of any
only. party interested in the matter.
4. Scope It is restricted to balance sheet It is wider in scope. It may be
and profit and loss account. carried out beyond balance
sheet.
5. Compulsion Audit is legally compulsory for It is voluntary. It is required
companies under certain circumstances
6. Time It may be conducted at the end It may be conducted at any time
of the year. in case of suspicion about any
transaction.
7. Report Form of report is prescribed. It Form of report is not
is presented to the prescribed. It is presented to
shareholders. the client.
8. Appointment Owners appoint the auditors. Even third party can appoint
an investigator.
9. Qualifications The statutory auditors must Even an employee preferably a
possess proper qualifications. chartered accountant may be
appointed as investigator.
10. Rework Re – audit is not generally Re - investigation may be
undertaken. undertaken.
