Distinguish Accounting, Auditing, and Investigation, Differences between Accounting Auditing and Investigation. In this article, you can find everything you want to know about Investigation, auditing, and Accounting. Find Differences betweenDifferences Between Auditing And Investigation, Audit vs Investigation, Difference Between Accounting and Auditing. Must Read Dual Aspect Concept.
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Distinguish Accounting, Auditing, and Investigation
1. Accounting:
It is the art of recording, classifying, and summarizing financial information, transactions, and events, and the preparation of reports thereon. The main objective is to prepare financial statements.
- Management is responsible for the maintenance of the accounting system and the preparation of financial statements.
- It involves recording aspects of financial information.
- It deals with measuring, recording, classifying, summarizing, and communicating financial information to various stakeholders.
- Its prime objective is to prepare financial statements exhibiting a true and fair view.
2. Auditing:
An audit is the independent examination of financial information of any entity, whether profit-oriented or not, and irrespective of its size or legal form when such an examination is conducted to express an opinion thereon. It is mandatory for corporate assessments and voluntary for proprietorship/ partnership firms. You may also like Accounts and its Classification.
- The normal period of coverage is one financial year.
- The audit is carried out on behalf of the owners.
- It is conducted by a practicing Chartered Accountant.
- Uses both types of audit evidence, persuasive as well as conclusive.
- Test checking/sampling is an acceptable audit technique subject to the materiality concept.
- The audit begins with no preconceived notion.
- The format of the audit report is prescribed.
Must Read –Meaning and Scope of Accounting
3. Investigation:
Investigation implies systematic, critical, and special examination of the records of a business for a predetermined specific purpose. It is a voluntary activity conducted at the instance of management. Example: Special audit u/s. 233A, Oppression and mismanagement u/s.397-409. Must Check Rectification of Errors.
- The normal period of coverage may be less than or more than one financial year
- Investigation is carried out on behalf of owners/management/ third party.
- It may be conducted by staff of the entity, Chartered Accountant, or External Agency.
- Only conclusive and corroborative evidence is sought.
- May cover any type of aspect, ex. Financial or non-financial
- Detailed, exhaustive, and thorough examination is required.
- The investigation is started with preconceived notions.
- No specific format is prescribed.
