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.

Examine the policies of management

The statutory auditor is not required to examine the policies of management and their implementation or whether any improvement in the efficiency of management can be made. In these days a report on all these matters is very important to business. The management auditors are appointed to advise the management on the various matter related to management. These people examine the various aspects of management and evaluate the actual performance by comparing it with predetermined standards. They advise management on the matter relating to performance of various departments as well as of the organization as a whole.

Steps in management audit

Reviewing of operative objective to ensure that they are stated in specific terms and to assess whether these are helpful to achieve the desired results.

• On the basis of overall objective, the goals and plans of different department are developed. 
• Examine organizational structure to see whether it suits to achieve organizational goal.
•  Review performance of each function and department of the management by comparing it with the objectives. 
• In the end, a report should be prepared suggesting improved cause of action.

Business forecasting is an act of predicting the future

Human conduct is governed by expectations. We are all interested to know something about the future. In fact, whatever we do at present is in the expectation that certain events will take place in future, based upon our past experience, forecasting of future event is, thus, engrained in human nature. Business Conduct is also similar to human conduct. As soon as a person enter into a business, he has to make a series of forecast as regards to the demand of the product, availability and price of the raw material, the requirements of funds, and future sale, etc. Success in business depends upon the correct predication about future shape of things, called forecasting.

While preparing business plans, management has to make some predication about future shape of things. The past experience and future events do have a bearing on the future possibilities. Forecasts are only well educated guesses or inferences as to what the future may be. Forecasting provides a logical basis for preparing plans. The actual performance of the past, the present situation and likely trends in the future are considered while preparing plans. Though, it is very difficult to predict about the uncertain future, but still an attempt is made to estimate the things in a systematic way. The forecasts should be regularly monifored and revised whatever is a change in situation. Business forecasting is an act of predicting the future economic conditions on the basis of past and present information. It refers to the technique of taking a prospective view of things likely to shape the turn of things in foreseeable future. As future is always uncertain, there is a need of organized system of forecasting in a business. Thus , scientific business forecasting involves:

• Analysis of the past economic conditions
• Analysis of the present economic conditions;