Procedure for conducting Investigation in Auditing

Procedure for conducting Investigation in Auditing

The following procedure are followed while conducting Investigation in auditing.

1. Determination of Nature and Scope

The instructions of the client regarding the nature, scope and objective should be obtained in certain and unambiguous terms. If the instructions are vague, they may create confusion and problems during investigation. The instructions should cover the area of the investigation, the purpose of investigation and the period to be investigated.

2. Formulation of Investigation Programme:

1. An investigation programme cannot be fixed and rigid. Actual investigation procedures at each stage have to be programmed, depending upon the various developments in the course of the investigation.

2. The finding of the previous steps will decide the further course of investigation. While formulating the investigation programme, the broad scope and limits are to be determined.

3. The list of records and documents to be verified are to be determined at this stage keeping in view the objective and purpose of the investigation.

3. Conduct of Investigation:

A thorough investigation, i. e, examination of various records and documents, and examination of various persons of the concern, relating to the investigation area are to be conducted.

At every stage, the investigator may decide the further course of investigation based on the circumstances and various findings.

The investigator shall maintain, an exhaustive record of work done, evidences examined, important discussions held etc., as evidence for the investigation conducted. The record maintained by the investigator along with the supporting documents may form the basis for formulation of conclusion and preparation of the investigation report.

4. Investigation Report

The investigator may correlate all his findings, analyze all the supporting documents and statements, thoroughly examine the investigation records and draw conclusions. While doing so, he must have an open mind, free from pre-conceived notions.

Contents of Investigations Report

The investigator may draft the investigation report. The report may contain,

1. The purpose and scope of Investigation.

2. The period covered by the investigation.

3. The terms of investigation with reference to the written instructions of the client.

4. The various limitations faced by the investigator that may materially affect the conclusion drawn should be mentioned.

5. The assumption forms the basis of investigation. The assumption should not defeat the very purpose of the investigation.

6. The investigation report should contain headings, with subheadings, charts, graphs, etc.

7. Conclusion of the investigator should be stated is clear and certain terms.

8. The supporting documents and data may be presented as appendices to report.