The process that calculates the accounting information, given in the financial statements of an association. It is a process of analyzing the results that whether the accounting information is accurate and according to the particular standards. Auditing involves the certainty of financial reports to 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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The effort made to uncover the facts following a specific condition in order to find out the truth 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 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 employed include observation, inquiry, searching, interrogation, and inspection etc. The investigation process 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
The major differences between auditing and investigation are given below:
- Auditing is the process of examining an individual’s financial statement and passing estimation on it. Whereas investigation is a comprehensive and careful study of the accounts books to find out the truth.
- The facts gained from audit process are influential. On the other hand, the evidence gained from investigation process is critical in nature.
- The nature of auditing carries a general examination while the investigation has a critical nature.
- Auditing conducted on yearly basis but Investigation controlled according to the needs of the organization.
- And, Auditing performed by chartered accountant while experts hired for an investigation.
- Auditing stands essentially for every organization but an investigation is unrestricted.
- In case of auditing, financial reporting is general purpose and reporting of an investigation is private.
- An auditor appointed by the shareholders of the company whereas the investigator 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 answer only those questions that are examined in the engagement letter.
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