Definition Of Auditing
The process that calculates the accounting information, given in the financial statements of an association. It is a process of analyzing the results and whether the accounting information is accurate and according to the particular standards. Auditing involves the certainty of financial reports to be fairly presented and prepared. Whereas reports are in compliance with the accounting standards and principles. In order to achieve a fair view of its financial statements. The auditing functions conducted by experts who can make this sort of evaluation. Company law makes audit compulsory. And it held necessary for firms to release audit information and documents completely to the public. The firm generally agrees upon the audit before the financial statements are opened to the public and make certain regarding the data is providing a fair and true demonstration of the firm’s financial status.
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Definition Of Investigation
The effort made to uncover the facts following a specific condition in order to find out the truth is called investigation. Investigation for a business association indicates detailed, organized, and significant inspection of the accounts books along with past and present transaction records of an individual. As it is conducted for a particular purpose, to expose a truth. And with the help of proof in launching a fact. In the course of the investigation, the most general ways that are employed include observation, inquiry, searching, interrogation, inspection etc. The investigation process is carried out by a specialist for the verification of certain facts. And administered according to the requirements of the association without any specific period.
Key Differences between Auditing and Investigation
|What Is It?||Auditing is the process of analyzing financial statements and making an estimation.||An Investigation is a process of carefully studying the account books to uncover the truth.|
|What is the Objective?||General examination||Critical Examination|
|When is it Carried Out?||Conducted on a yearly basis.||Conducted according to the needs of the company.|
|Who is it Performed By?||Chartered Accountants||Experts|
|Who is it for?||Specifically, for every organization||Unrestricted and can be done by anyone.|
|What Does It Report?||Financial reporting||Private reporting|
|Who||Appointed by the shareholders of the company||Can be appointed by management, shareholders or a third party.|
|What is the Scope?||Getting an opinion on the company’s financial standing.||Restricted to getting only answers to questions asked in the engagement letter.|
|What is the Outcome?||Facts are gained from the audit and are influential in nature.||Evidence is gained from an investigation and is critical in nature.|
Some breif points on Differences between auditing and investigation are given below:
- Auditing is the process of examining an individual’s financial statement and passing an estimation on it. Whereas investigation is a comprehensive and careful study of the accounts books to find out the truth.
- The facts gained from the audit process are influential. On the other hand, the evidence gained from the investigation process is critical in nature.
- The nature of auditing carries a general examination while the investigation has a critical nature.
- Auditing is conducted on yearly basis but Investigation is controlled according to the needs of the organization.
- And, Auditing is performed by chartered accountants while experts are hired for an investigation.
- Auditing stands essentially for every organization but an investigation is unrestricted.
- In the case of auditing, financial reporting is a general-purpose, and reporting of an investigation is private.
- An auditor is appointed by the shareholders of the company whereas the investigator is appointed by the management, shareholders or one-third party.
- Generally, the scope of auditing lies in giving an opinion on the company’s financial statement. On the contrary, the scope of the investigation is restricted to answering only those questions that are examined in the engagement letter.
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