Table of Contents
What is Auditing?
Auditing is a rigorous and essential process involved in accounting and finance. By definition, it is the process of analyzing a business’s transactions and financial records. Since large enterprises have large sums of reviews and transactions, it’s necessary to make sure they are fair and transparent.
Usually performed by an auditor, the right for auditing can be hired permanently and also on a temporary basis, given the needs and size of the business. Auditor has to be impartial in analyzing the financial processes with fairness and transparency.
The auditing is done after a predetermined period of time – for example, on a daily or monthly basis. It checks if every transaction is aligned with the company’s policy of spending and transacting. Two types of auditing for famous: internal and external auditing.
The former is a managerial task that aims at the processes within the sphere of a business. The latter is, however, to check if transactions are legit. Some large-sized companies also incorporate both types in their auditing model.
What is Investigation?
The investigation, in accounting and finance, is a process used to look into a business’s financial assets and transactions for a specific purpose. This purpose could be an abruptly emerging event, mishap, or susceptible practice. The investigation is not conducted for a business on a regular basis. Instead, it is an unusual examination of financial matters.
There may be so many years in the life span of a business when the investigation is not required because it is always necessitated by a need for examination and verification. The investigation is a multidimensional process, and the investigator looks into multiple dimensions of finance.
As for the investigator’s appointment, he is not someone who is part of or an employee of the business. He is selected from outside to ensure the process’s transparency and fairness. The investigator does not include his own biases and is committed to reporting the facts and figures as per the available evidence and records.
The investigation has its own experts and cannot be conducted by a chartered account. Although it is concerned with accounting, it has different processes and channels to achieve its ends. The conclusions drawn in an investigation can be used by the leadership and management to take serious decisions and, in some cases, actions.
Difference Between Auditing and Investigation
- Auditing is the process of reviewing financial transactions in fixed intervals, whereas the investigation is conducted for a specific purpose.
- Auditing can be done by a chartered account, whereas the investigation is so rigorous that it is not conducted by CA.
- Auditing has a limited scope when it is done, whereas an investigation encompasses many aspects and dimensions of a business.
- Auditing can be done by a person who works within a business, whereas the investigation is done by an outsider.
- Auditing does not necessarily impact management and leadership, whereas investigation paves the way for important decisions.
Comparison Table Between Auditing and Investigation
|Parameters of Comparison||Auditing||Investigation|
|Definition||Analysis of transactions after a fixed period of time||Analysis of transactions and assets for a purpose|
|Frequency||Regularly, Weekly, Monthly||Only When the Need Arises|
|Impact||Not Much Impactful||Potentially Impactful|