Examination of records and accounts

It is a special kind of examination of records and accounts done by an investigator with a predetermined purpose. Professional accountants are often required to investigate the accounts of records of a business. Investigation differs from the normal audit. Financial audit aims at collection of sufficient evidence in the support of the credit ability of the financial statement but investigation, on the other hand, requires a special examination of the particular records or transaction with a specific purpose. In most of the cases the investigation is done to ascertain the true financial position of the company, its profit earning capacity, the existence of fraud and the extent of mismanagement.

Investigation of a joint stock company is not legally compulsory as it is the case with audit. In audit the Auditor performs audit as a matter of routine at some regular interval but an investigator has to be more searching and inquisitive in his enquiry and should go beyond the books to reveal the real facts and reasons.

Investigation involves inquiry into facts behind the books and accounts into the technical, financial and economic position of the business or organization. As investigation is a critical examination of the books and accounts with a specific objective.

It is essential for an investigator to make himself familiar with all the important details, documents, Contracts, books of accounts and legal document about a business before the commencement of his work. The investigator in on way is influenced by the directors, managers and the senior officer of the business. From time to time, the investigator should seek assistance of technical experts during the course of his enquiry.