Investigation is an examination of accounts and records of a business concern with some special purpose in view. In most of the cases the purpose of such an enquiry is to know as actually as possible the financial position of the concern so that an opinion can be formed and action taken accordingly.
Thus, it is a sort of special audit with a particular object in view. It is actually conducted in addition to the regular audit of accounts and is, thus, a scrutiny of accounts pertaining to several years whereas an audit relates only to a particular period, more specially a financial year.
This is the major point of difference between the two. But it has to be remembered that the investigation of accounts of a joint-stock company is not legally compulsory as is the case with audit.
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Thus, there is another major point of difference between the two. An auditor performs audit as a matter of routine at some regular interval but an investigator has to be more searching and inquisitive in his enquiry, even though there are no suspicious circumstances during the course of his work. Nevertheless, the objects are different in each case.
Essentials for Investigation:
An investigator should keep the following points in view during the course of investigation:
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1. He should keep himself free from the influence of Directors and Managers of the business.
2. He should familiarise himself with all the important details about a business before the commencement of his work.
3. If necessary, he should seek the assistance of technical experts during the course of his enquiry.
4. He should confine to himself the purpose of investigation and keep details in regard thereto quite secret.