RKP & Co., Chartered Accountants, were appointed as the statutory auditors of Orion Engineering Ltd., a company engaged in manufacturing heavy…

In the given case, the shareholders of Orion Engineering Ltd. have requested the auditor to perform certain activities which fall outside the normal scope of audit. The scope of audit does not include the following: Matters outside the auditor's technical competence: An auditor is not expected to perform duties that require specialised technical expertise beyond accounting and auditing knowledge. For instance, determining the physical condition or useful life of sophisticated machinery or assessing the structural suitability of buildings requires technical skills of engineers or other experts. Therefore, the auditor cannot certify such matters. Authentication of documents: An auditor is not an expert in detecting forgery or verifying the genuineness of documents. While the auditor may examine documents as audit evidence, he cannot guarantee their authenticity because he does not possess specialised expertise in forensic document verification. Conducting an official investigation: An audit is not an official investigation into alleged wrongdoing. The auditor does not possess legal powers such as searching premises or recording statements of witnesses on oath, which are generally available to investigative authorities. Audit is distinct from investigation: Investigation involves a critical examination of accounts with a specific purpose, such as determining whether fraud exists. Its scope is specific and narrow. On the other hand, the objective of audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion. The scope of audit is general and broad, whereas the scope of investigation is specific and narrow. Accordingly, in the given case, the auditor of Orion Engineering Ltd. is justified in clarifying that certification of technical condition of machinery, authentication of documents, and conducting a detailed fraud investigation fall outside the normal scope of audit and such matters may require involvement of experts or a separate investigation.