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Investigation

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INVESTIGATION AND ITS OBJECTS



Investigation means an inquiry into the accounts of a business for a special purpose. It is an
examination of the books of accounts of a business to know the actual financial position or earning capacity etc.
According to Taylor and Perry "Investigation involves inquiry into facts behind the books and accounts into the technical, financial and the economic position of the business or organisation". It is a kind of special audit with a limited or extended scope according to the purpose for which it is conducted.


Objects of investigation

 Following are some of the objectives for which investigation are conducted:-


  • Investigation of behalf of an individual or a promoter of a joint stock company which wishes to purchase a private running business in order to ascertain the financial position and the earning capacity of the concern proposed to be taken over.
  • Investigation on behalf of an incoming partner, who wants to know the earning capacity of the firm, the financial position of the concern and whether it is advisable to become a partner.
  • Investigation on behalf of a client who wishes to lend money to a concern to know its financial position.
  • Investigation where fraud is suspected by the proprietor.
  • Investigation on behalf of a client who wishes to purchase the shares of a company.
  • Investigation under the Indian Companies act.
  • Investigation to ascertain the amount of compensation payable on the compulsory removal of business.
  • Investigation for claims under an insurance policy covering consequential losses.
  • Investigation on behalf of the company or an individual for alleged negligence or lack of skill by the Auditors.
  • Investigation on behalf of beneficiaries where trustees are suspected of fraud or misappropriation.
  • Investigation on behalf of Income Tax authorities for tax liability or for detection of undisclosed income.

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