Investigation is a detailed examination of accounts and enquiry into the state of affairs of the business or for a specific purpose. It involves the process of analysing, collecting and presenting facts in a manner which enables the parties to know the essential facts regarding the matter under enquiry. Investigation covers more than one financial period and the programme depends on each type of investigation.
Example: Investigation is conducted in deduction of suspected
fraud and theft, to identify causes for continuous loss and low productivity
and to evaluate the credit worthiness of business.
· According to Spicer and Pegler, “The term investigation implies an examination of records for some special purpose”.
· Taylor and Perry, “Investigation involves and enquriy into the fact beyond the books of accounts into the technical, financial and economic position of the organisation”.
The following are the objectives of Investigation:
· To ascertain the financial position and the earning capacity of the concern.
· To investigate when fraud is suspected by the proprietor.
· To investigate on behalf of Income Tax authorities for tax liability.
· To investigate for the purpose of lending money to a concern.
· To investigate for claims under insurance policy covering losses.