Investigation in auditing usually takes place when there is a fraud that has been uncovered and there is a need to dig deeper into what really happened with regards to how much was stolen, the number of individuals involved with the process of investigation in auditing, how long it has been happening, how much is the damage as a result of the same.

READ: Similarities Between Accounting And Auditing

The Process Of Investigation In Auditing

The company hires an investigator or team of investigators for this operation. This article will discuss the process involved in the investigation of auditing.

Planning the investigation

Every successful course of action requires proper planning hence, planning is the first step in the investigation. Planning is the first step in ensuring that the investigation will be systematic. It’s in this step that questions like “what resources will be needed to carry out this operation amicably?” “How long will the investigation last?”

Data Collection

Information about what transpired is gotten from various sources, not only the individuals involved or the witnesses but also from documents and since auditing mainly has to do with suspicion of financial fraud, things like receipts, bank statements, payment slips are essential in the collection of information.

Data Analysis

Since an incident like fraud or misappropriation of funds is a series of events, the chain of events leading to the time it is finally discovered, ought to be followed and understood before any conclusion is made one risks making a premature conclusion thereby not attaining the desired results from the investigation.

It is in the step where investigators need to ask questions like:

Was it deliberate?

Was it a mistake?

Has a similar happened before this one?

If perhaps it was a mistake, was the person aware of it the first time it happened?

Was the fraudster acting alone or had other people with whom he or she conspired?

What are the loopholes that the fraudster took advantage of?


An investigation comes to a conclusion when all issues have been closed out and the investigator are satisfied with what they have gotten of it and are ready to present the findings to the people that hired them to investigate on their behalf. The report should not leave question marks, it should be clear and conclusive and answer all questions.

The process of investigation in auditing needs to include, in case of fraud, how much was misappropriated, where the money went, what it was used for, how long back did this misappropriation of funds begin, who was involved in it, was the individual working alone or had people with whom he/she conspired?

The report should include the following:

Purpose and scope of the investigation

The period covered by the investigation

The terms of investigation with regards to the guidelines given by the client

Limitations encountered by the investigator could have affected the conclusion.

The assumption should not overshadow the very purpose of the investigation.

The conclusion by the investigator should be stated in clear terms and the supporting documents and data ought to be presented as appendices to the report.