Differentiate between Auditing and Investigation.

Difference between Auditing and Investigation.

Auditing is an independent and systematic examination of the books, accounts, records and financial statements and all supporting vouchers and documents of a business or other organization, for verifying whether the accounting records truly and properly reflect all the transactions. Investigation implies an enquiry into the accounts and records of a business concern. In other words investigation is a examination of accounts and records of a business concern with some special purpose in view.


  • Object: Investigation is done for some specific purpose according to the necessity of the situation.
  • Appointer: Investigation may be carried out on behalf of the third parties also.
  • Report: The investigation report is prepared according to the necessity of the situation.
  • Scope: Investigation is determined by the object intended to be achieved by the party on whose behalf investigation is undertaken.
  • Compulsory: The investigation of books of accounts and records is not legally compulsory.
  • Time Coverage: The period covered by an investigation is determined by the objectives. It may be for a week, month or extend to several years.
  • Disclosure Requirements: There are no legal requirements as to disclosure of information in an investigation.
  • Qualification: It is not necessary that an investigator must be a Chartered Accountant.
  • Utility: The results of investigation are beneficial only to the client.

Auditing .

  • Object: The object of audit of accounts is to ascertain whether the Balance Sheet of the concern shows the true and fair view of the state of concern or not.
  • Appointer: Audit is carried out on behalf of the proprietor of the business.
  • Report: The audit report is prepared as per the act.
  • Scope: An audit extends to all factual assertions in the financial statements with a view of a ascertaining their truth.
  • Compulsory: Audit is compulsory in case of Joint Stock Companies.
  • Time Coverage: An audit examination generally covers the accounting year of the client.
  • Disclosure Requirements: The auditor is legally required to ensure complete disclosure of the information as prescribed.
  • Qualification: Auditing can be conducted by a practicing Chartered Accountant.
  • Utility: The results of auditing are widely used.

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