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Auditing vs. Investigation: Know the Difference

Shumaila Saeed
By Shumaila Saeed || Published on January 26, 2024
Auditing is the systematic examination of financial records, while Investigation is a detailed inquiry or examination for a specific purpose.
Auditing vs. Investigation

Key Differences

Auditing is a formal process of evaluating the accuracy and fairness of a company's financial records, typically conducted by an external party. On the other hand, an Investigation is a thorough examination, often into a specific issue or allegation, and can be financial or non-financial in nature.
Shumaila Saeed
Shumaila Saeed
Jan 26, 2024
The goal of Auditing is to ensure that financial statements are presented fairly and in accordance with accounting standards. In contrast, the purpose of an Investigation is to uncover facts, often relating to suspected fraud, misconduct, or other specific concerns.
Shumaila Saeed
Shumaila Saeed
Jan 26, 2024
Auditors follow established procedures and standards, focusing on verifying financial information accuracy. Investigations, however, are more flexible in approach, adapting to the specifics of the case and may involve gathering a wide range of evidence.
Shumaila Saeed
Shumaila Saeed
Jan 26, 2024
Auditing is a regular and routine process, typically performed annually. Investigations are initiated based on specific triggers or suspicions and are not part of routine processes.
Shumaila Saeed
Shumaila Saeed
Jan 26, 2024
In Auditing, the scope is defined by accounting standards and focuses on financial statements. Investigations have a defined but flexible scope, targeting a particular area of concern, which may not always be financial.
Shumaila Saeed
Shumaila Saeed
Jan 26, 2024
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Comparison Chart

Purpose

To verify financial statement accuracy
To inquire into specific issues or allegations
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Shumaila Saeed
Jan 26, 2024

Scope

Defined by accounting standards
Specific and adaptable to the case
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Jan 26, 2024

Nature

Systematic and routine
Triggered by specific suspicions or needs
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Jan 26, 2024

Procedures

Follows standard auditing procedures
Flexible, varies per case
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Shumaila Saeed
Jan 26, 2024

Outcome

Provides assurance on financial statements
Uncovers specific facts or resolves specific issues
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Auditing and Investigation Definitions

Auditing

Examination of financial records to ensure accuracy and compliance.
The company underwent auditing to confirm its financial reporting was accurate.
Shumaila Saeed
Shumaila Saeed
Jan 05, 2024

Investigation

Inquiry or research into a particular event or allegation.
The police launched an investigation following the reported incident.
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Shumaila Saeed
Jan 05, 2024

Auditing

Checking an entity's financial records against accounting standards.
The auditing process ensured that the company adhered to international accounting standards.
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Shumaila Saeed
Jan 05, 2024

Investigation

Gathering and analyzing information to uncover facts.
The investigation involved interviewing several witnesses and reviewing documents.
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Shumaila Saeed
Jan 05, 2024

Auditing

An independent assessment of financial statements for stakeholders.
Annual auditing provides investors with confidence in the company's financial health.
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Jan 05, 2024
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Investigation

The process of examining a specific issue in detail.
The investigation into the financial irregularities revealed fraud.
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Shumaila Saeed
Jan 05, 2024

Auditing

The process of reviewing and verifying an organization's financial processes.
Auditing helped them identify inefficiencies in their financial operations.
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Shumaila Saeed
Jan 05, 2024

Investigation

Systematic fact-finding to determine the truth of an allegation.
The investigation confirmed the allegations were baseless.
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Shumaila Saeed
Jan 05, 2024

Auditing

Evaluating the effectiveness of internal financial controls.
The external auditing team assessed the robustness of the company’s internal control systems.
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Shumaila Saeed
Jan 05, 2024

Investigation

A thorough exploration to resolve a specific query or suspicion.
The internal investigation was aimed at understanding the data breach.
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Shumaila Saeed
Jan 05, 2024

Auditing

An examination of records or financial accounts to check their accuracy.
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Jan 05, 2024

Investigation

The act or process of investigating
A politician under investigation.
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Jan 05, 2024

Auditing

An adjustment or correction of accounts.
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Shumaila Saeed
Jan 05, 2024

Investigation

A careful examination or search in order to discover facts or gain information.
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Shumaila Saeed
Jan 05, 2024

Auditing

An examined and verified account.
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Jan 05, 2024

Investigation

The act of investigating; the process of inquiring into or following up; research, especially patient or thorough inquiry or examination
The investigation into the crime has led to various leads as well as plenty of dead ends.
Despite thorough investigation, the perpetrator of the attacks remains unknown.
Carry out an investigation
The matter is awaiting investigation
The case is still under investigation.
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Shumaila Saeed
Jan 05, 2024

Auditing

A thorough examination or evaluation
An audit of water use.
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Shumaila Saeed
Jan 05, 2024

Investigation

The act of investigating; the process of inquiring into or following up; research; study; inquiry, esp. patient or thorough inquiry or examination; as, the investigations of the philosopher and the mathematician; the investigations of the judge, the moralist.
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Shumaila Saeed
Jan 05, 2024

Auditing

To examine, verify, or correct the financial accounts of
Independent accountants audit the company annually. The IRS audits questionable income tax returns.
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Shumaila Saeed
Jan 05, 2024

Investigation

An inquiry into unfamiliar or questionable activities;
There was a congressional probe into the scandal
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Shumaila Saeed
Jan 05, 2024

Auditing

To attend (a course) without requesting or receiving academic credit.
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Shumaila Saeed
Jan 05, 2024

Investigation

The work of inquiring into something thoroughly and systematically
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Shumaila Saeed
Jan 05, 2024

Auditing

To examine or evaluate (something) thoroughly
Audit a house's energy consumption.
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Shumaila Saeed
Jan 05, 2024

Auditing

To conduct an audit.
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Shumaila Saeed
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Auditing

Present participle of audit
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Shumaila Saeed
Jan 05, 2024

Auditing

The act or result of performing an audit.
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Shumaila Saeed
Jan 05, 2024

Repeatedly Asked Queries

Who performs investigations?

It varies - could be internal staff, external experts, or law enforcement.
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Shumaila Saeed
Jan 26, 2024

Is auditing a legal requirement?

For public companies and certain others, yes, auditing is legally required.
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Shumaila Saeed
Jan 26, 2024

Can auditing detect fraud?

Auditing can detect irregularities, which may indicate fraud.
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Shumaila Saeed
Jan 26, 2024

What's internal auditing?

It's auditing carried out by an organization's own staff for internal control purposes.
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Shumaila Saeed
Jan 26, 2024

How long does an investigation take?

It depends on the complexity and scope of the specific case.
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Shumaila Saeed
Jan 26, 2024

What types of investigations are there?

Financial, criminal, compliance, internal, etc.
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Shumaila Saeed
Jan 26, 2024

When is an investigation typically conducted?

When there's a specific issue, suspicion, or allegation to be resolved.
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Shumaila Saeed
Jan 26, 2024

What's the outcome of an audit?

An audit report detailing the fairness and accuracy of financial statements.
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Shumaila Saeed
Jan 26, 2024

What is the primary purpose of auditing?

To verify the accuracy and fairness of financial statements.
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Shumaila Saeed
Jan 26, 2024

Do auditors need access to all company records?

Yes, auditors typically require access to all relevant financial records.
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Shumaila Saeed
Jan 26, 2024

What qualifications do auditors usually have?

Auditors are often certified professionals, like CPAs.
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Shumaila Saeed
Jan 26, 2024

Can anyone request an investigation?

Yes, stakeholders, regulatory bodies, or management can request investigations.
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Jan 26, 2024

What skills are essential for investigators?

Analytical skills, attention to detail, and investigative expertise.
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Shumaila Saeed
Jan 26, 2024

Is an investigation always legal in nature?

Not always; it can be internal and focused on policy or procedural issues.
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Shumaila Saeed
Jan 26, 2024

Can investigations lead to legal action?

Yes, if investigations uncover illegal activities, they can lead to legal consequences.
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Shumaila Saeed
Jan 26, 2024

What can trigger an investigation?

Triggers include suspicions of fraud, compliance breaches, or specific complaints.
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Shumaila Saeed
Jan 26, 2024

Can auditing improve business processes?

Yes, it can highlight areas for efficiency and control improvements.
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Shumaila Saeed
Jan 26, 2024

How often are audits performed?

Typically annually, but it can vary based on company policy or regulation.
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Shumaila Saeed
Jan 26, 2024

Are investigation findings made public?

It depends on the case and the involved parties' policies.
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Jan 26, 2024

What's the role of technology in auditing?

Technology is increasingly used for data analysis and efficiency in auditing.
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Shumaila Saeed
Jan 26, 2024

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About Author
Shumaila Saeed
Written by
Shumaila Saeed
Shumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.

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