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Audit and Investigation Comparison

Audit and Investigation Comparison

Auditing and investigation both involve a systematic and critical examination of the available evidence, yet these are quite distinct from each other which is as follows:

Auditing:

Meaning:

Auditing relates to the independent examination of financial information of any entity. when such an examination is conducted with a view to express an opinion.

Scope:

Audit covers all factual assertions in the financial statements to ascertain their truth and fairness.

Object:

The object of an audit is to critically examine the financial statements to ascertain their truth and fairness.

Coverage:

Auditing is a routine exercise generally an accounting year.

Purpose:

To enhance the degree of confidence of intended users in the financial statements.

Appointment:

Auditor may be appointed by the owners or shareholders.

Procedure:

The audit is conducted in accordance with the Generally Accepted Auditing Procedure.

Approach:

Auditor is skeptical and not suspicious.

Evidence:

Audit evidence is persuasive.

Extent of Checking:

Test checking or sample checking is allowed.

Report:

Auditors reports to the owners. for example-Share holders.

Investigation:

Meaning:

Investigation relates to systematic, critical and special examination of the records of the business for a specific purpose.

Scope:

Scope is limited as regards the period or area to be covered.

Object:

Investigation aims at ascertaining certain facts such as fraud, tax liability, value of shares etc.

Coverage:

Investigation may spread over a period longer than one year.

Purpose:

To establish a fact or assessing a particular situation.

Appointment:

Investigator may be appointed by the owners or management or even third parties.

Procedure:

Investigation involves an extended auditing procedure.

Approach:

Investigator starts his work with suspicion & collects evidence to either confirm or dispel that suspicion.

Evidence:

Investigator relies on conclusive.

Extent of test checking:

In investigation particularly to detect frauds, test checking may not be advisable.it may be necessary to check 100%

Report:

Investigator reports to the person on whose behalf he has undertaken the investigation.

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