Difference Between Auditing and Investigation

The process that calculates the accounting information given in the financial statements of an association. It is a process of analyzing the results and determining whether the accounting information is accurate and according to the particular standards. Auditing involves the certainty that financial reports are fairly presented and prepared. Whereas reports comply with the accounting standards and principles. To achieve a fair view of its financial statements.

The auditing functions are conducted by experts who can make this sort of evaluation. Company law makes audit compulsory. Firms must 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 provides a fair and true demonstration of the firm’s financial status.

Understanding Business Investigations: Purpose, Methods, and Process

1. The effort made to uncover the facts following a specific condition to find out the truth is called an investigation.
2. Investigation for a business association involves a detailed, organized, and thorough inspection of an individual’s account books and past and present transaction records.
3. It is conducted for a specific purpose: to uncover the truth.
4. In the course of the investigation, the most general ways that are employed include observation, inquiry, searching, interrogation, inspection, etc.
5. The investigation process is carried out by a specialist who verifies certain facts. And administered according to the requirements of the association without any specific period.

 

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Key Differences Between Auditing and Investigation

Aspects	Auditing	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 every year	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.	Evidence is gained from an investigation and is critical.

Below are some key points highlighting the differences between auditing and investigation:

• Auditing is the process of examining an individual’s financial statement and passing an opinion 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.
• The nature of auditing carries a general examination, while the investigation has a critical nature.
• Auditing is conducted every year, but an Investigation is conducted 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.

Farahat & Co. was established in the UAE in 1985. The firm holds ISO certification and is recognized as one of the top audit firms in Dubai. Our mission is to provide clients with a comprehensive range of audit and related services, including legal auditing, VAT accounting, and assistance with business setup documentation and formalities across Abu Dhabi, Sharjah, UAE free zones, and the wider Arab Gulf region.