MODULE 4 Flashcards
(17 cards)
What is meant by investigation in auditing?
It is a detailed and critical examination of accounts or transactions for a specific purpose like detecting fraud
How does investigation differ from audit?
Audit ensures accuracy and compliance of financial statements
What is the main objective of an investigation?
To find facts and provide evidence-based conclusions about specific financial matters.
What is an investigative audit?
An audit conducted to examine suspected fraud
Name two types of investigative audits where fraud is suspected.
Investigation into embezzlement of funds and manipulation of accounts.
What are some signs that may trigger an investigative audit?
Sudden drops in profit
What is the role of an auditor in fraud investigation?
To gather evidence
Why is investigation required during acquisition of a running business?
To assess the financial health
What aspects are examined in an investigation before acquiring a business?
Assets
Who can order a financial investigation?
Management
Investigation definition
Systematic and critical examination of books and records of an entity for any specific purpose.
It is a searching enquiry to ascertain a particular fact or to assess a situation
Special detailed audit with a particular object in view
Features of investigation
Critical examination of specific records
Personal examination of individuals
Specific certain objectives
Limitedor extended scope
Voluntary and contractual
Assistance of experts
Findings in audit report to client
Factual info are in analytical and descriptive manner
Future of course action
Not financial aspects alone
Essentials for investigation
Obtaining clear instructions
Chalking out a programme
Uninfluenced
Seeking the help of technical experts
Opinion about state of affairs
Relying on audited accounts
Maintaining of records
Submission the report
Purpose/object/different classes of investigation
Proposed purchaser of business, incoming partner, client who intends to lend money, proprietor, client who wishes to purchase shares,under CA 2013, insurance policy claims, company or an individual for negligence of auditors, beneficiaries,liquidator of co, income tax authorities
Types of investigation
When fraud is suspected
Misappropriation of goods,cash and accounts
Investigation On acquisition of a running business
Misappropriation of cash ways
Ommiting to enter receipts
Entering less amount than received
Entering fictitious payment
entering more amount than what actually is paid
Teeming and lading
