A Comparison Between Audit and Investigation
28

Aug 2019

The recent times have been very good to the business all over the world. Businesses have increased, there is a better and globalized world, and there have been technological advancements in almost all the fields of business. Nevertheless, there may be discrepancies and frauds happening in the company. To find these frauds, various methods are used such as investigations, audits etc.

For the common man, an investigation and an audit are almost the same, but they cannot be more wrong. There is a subtle difference that exists between these two. In this blog, we will try to understand the concept of an audit and the concept of investigation and what is the difference that lies between them.

Audit

An audit or a financial audit can be defined as the inspection, examination or verification of a system, process, project or product. An audit is usually performed to find out the authenticity of the product. A review will also help to understand the working of a particular process and if the proper procedure is being followed or not. This examination is generally conducted by a separate third party which has no relations to the company being audited. A business organization should conduct an audit at regular intervals to keep a check on the process being followed. The audit report prepared at the end of the audit process will tell the management of the company what needs to be improved and which part of the company can be developed further.

Let us now understand what an audit is

Investigation

An investigation is detailed scrutiny of selected activities which will help us understand the process in a better and comprehensive way. An investigation is the complete enquiry of specific accounts or records of a business. An investigation is generally used to prove a particular fact, and this makes it very crucial in accountancy, financial management and journalism. As investigation focuses on a specific part or service of the organization, the management can find the flaws in a process by performing the proper research of the activity.

Differences between Investigation and Auditing

The significant differences between Audit and Investigation are as follows:

Basis

Investigation

Audit

Definition

An investigation is defined as an inquiry or a detailed examination to achieve particular specific objectives

An audit is the examination, inspection and verification of any organization, system, process or product.

Nature

An investigation is an in-depth and detailed examination.

An audit is performed to catch hold of any deviations in the accounts.

Purpose

The purpose of an investigation depends upon the nature of the business.

The purpose of an audit is to understand the working of a company and catch hold of any deviations.

Time

An investigation has no fixed duration

An audit usually takes up three to six months, depending upon the size and nature of the company.

Scope

An investigation includes all the various factors which are connected to the primary purpose of investigation.

An audit includes overseeing the accounts of the business to check for any deviation in them.

When is it conducted?

An investigation is conducted after the Audit is complete, and the audit report has been formed.

An audit forms the base for an investigation.

In charge

An investigation has no defined in-charge. It can be taken up by anyone in the business.

An audit is usually conducted by a chartered accountant or a chartered accountant firm

Any obligations

An investigation is further done to understand the problem in the accounts of the business

Conducting an audit is deemed mandatory, according to the law.

Ownership

An investigation is usually conducted by the owner of the business or as an undertaking by an outside third party.

An owner of the business cannot perform the Audit of the company, but it is the owner who appoints the auditor.

These are some of the significant differences between investigation and auditing.  There can be many more differences, but to understand the fundamental differences between the two, the differences as mentioned above, are enough.

Investigation and auditing are two essential concepts, and even a small mistake in any of them will affect the company adversely. Therefore, it is best left to the professionals as they can provide you with solutions to the business problems.

 If you are in search of auditing and investigative services in the UAE, then look no further.

JAXA will take care of your financial problems. We not only provide auditing, investigation and forensic accounting services but also offer a range of various other facilities. To inquire about the multiple services provided by JAXA, please contact us - we’d be glad to assist you.