Distinguish Accounting, Auditing and Investigation
1. Accounting:
It is an art of recording, classifying and summarizing financial information, transactions and events, and preparation of reports thereon. The main objective is to prepare financial statements.
Management is responsible for maintenance of accounting system and preparation of financial statements.It involves in 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 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 with a view to expressing an opinion thereon. It is mandatory for corporate assesses and voluntary for proprietorship/ partnership firm.
Normal time period of coverage is one financial year.Audit is carried out on behalf of owners.It is conducted by a practicing Chartered Accountant.Uses both type of audit evidences, persuasive as well as conclusive.Test checking/sampling is acceptable audit technique subject to materiality concept.Audit begins with no preconceived notion.Format of audit report is prescribed.
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 & mismanagement u/s. 397-409.
Normal time period of coverage may be less than or more than one financial yearInvestigation 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 evidences are seeked.May cover any type of aspects, ex. Financial or non-financialDetailed, exhaustive and through examination is required.Investigation is started with preconceived notion.No specific format is prescribed.
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