Investigation:
When for a special purpose an inquiry is made into the accounts of the business it is called investigation. In other words, we may say that audit which is conducted for a particular object is called investigation.
Investigation involves inquiry into facts behind the books and accounts, into the technical, financial and the economic position of the business or organisation. Investigation is an examination of books and records preliminary of financing or for any specified purpose, sometimes differing in scope from the ordinary audit. Investigation implies an examination of and record for some special purpose.
Classes of Investigation:
There are many types of Investigation, but certain main classes can be identified. Following are some of the areas where the investigation is mostly called for:
1. Investigation on behalf of a person or company who wants to purchase a running business.
2. Investigation on behalf of a person who is interested to join as a partner in a partnership firm.
3. Investigation on behalf of a person who wants to lend money to a business or interested to know its financial position.
4. Investigation on behalf of the owner/shareholder of the business who suspects a fraud.
5. Investigation on behalf of the tax authority for assessing actual tax liability.