Auditing – Audit implies the examination of books of accounts and related documents of an organisation in order to correctly estimate their accuracy, completeness and regularity. Such an examination is carried out by a competent and unbiased person with the help of evidences, documents, information and explanations given to him.
Investigation – An Investigation is a special and in depth examination of the books of accounts of an organisation with a predetermined purpose. An investigation is always undertaken with a specific objective. It is different from both accountancy as well as auditing. In fact, it is an in-depth examination of the position behind the books of accounts and to the roots of the various transactions. It also includes finding out the technical, financial or economic situation of a business or an organisation.
An investigation is not merely an examination of the Profit and Loss Account and Balance Sheet, rather it also involves obtaining information from the client relating to the special objective. The scope of such an examination may be narrow or wide depending upon the basic objective. In an investigation facts are examined with the aim of achieving a definate conclusion.
Difference Between Auditing And Investigation
| Sr. No. | Basis | Auditing | Investigation |
| 1 | Object | The object of auditing is to establislh the completeness, correctness and truthfulness of the accounts of an organisation | The aim of investigation is detection of frauds or defalcations, or in-depth examination for some specific purpose. |
| 2 | Terms | Auditing involves the examination of books of accounts of the business for a year. | Investigation involves the examination of books of accounts for a number of years. |
| 3 | On Whose Behalf | Audit is usually conducted on behalf of the owner of the business. | Investigation is usually on behalf of external persons, though sometimes it may be ordered by the owner also. |
| 4 | Necessity | Many institutions such as, insurance companies, banking companies public and private companies are required by law to get their accounts audited. | Investigation is not legally compulsory in any circumstances. It is totally optional whether or not to get an investigation conducted. |
| 5 | Scope | The scope of auditing is limited as it only involves examination of books of accounts. | Investigation is wider in scope as, apart from books of accounts, other acts can also be examined. |
| 6 | Qualification | An auditor has to be a chartered accountant. | A qualified and experienced accountant may also be an investigator. |
| 7 | Frequency | An audit is usually conducted on a yearly basis. | Investigation is conducted only in certain specific situations. |
| 8 | Type Of Checking | Test checking may be used in an audit. | In an investigation the checking has to be complete and in-depth. |
| 9 | Report | In an audit the report has to be as per the specifications of the relevant Act. | In an investigation the report depends upon the nature of the investigation. |
| 10 | Criticism | In the report only those points are mentioned with which the auditor does not agree. In other words, auditing is not critical. | In an investigation the work is conducted with the aim of achieving a specific result and it is done from a critical point of view. |
| 11 | Documents | In auditing work is done on the basis of documents, vouchers and correspondence. | In an investigation, apart from vouchers, and documents, other facts are also examined. |
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