Reasons for carrying out investigation :
The real objective of conducting an investigation by an auditor on behalf of his client is to provide him the desired information in the form of a report about the matter specified. Normally the objective of investigation is to collect, analyze and evaluate facts in respect of desired field of activity with a view on some special purpose as determined by the person on whose behalf the investigation is undertaken.
The common reasons of getting the investigation done are listed below:
(1) Proposed purchase of business.
(2) Proposed sale of business.
(3) Reasons for low profitability.
(4) Cause of high employee turnover.
(5) Reliability of business data.
(6) Proposed investment in particular securities.
(7) Suspected fraud.
(8) Joining in existing partnership business.
(9) Borrowing funds.
(10) Lending funds.
(11) Proposed purchase of controlling shares in a company.
(12) Suspected misfeasance against directors.
(13) Detection of undisclosed income for tax purposes.
(14) Suspected misappropriation by trustees.