PMO Ltd., a manufacturing company, has received complaints of overstocking of raw materials and irregular payments to suppliers. The management has…
CA Final · Advanced Auditing, Assurance and Professional Ethics · RTP · May 2026
PMO Ltd., a manufacturing company, has received complaints of overstocking of raw materials and irregular payments to suppliers. The management has appointed SPY & Co. to investigate these issues and submit a report. Preliminary review shows that inventory records are incomplete, some purchase approvals were bypassed and supporting documents for payments are missing. (a) State the key steps the investigator should follow to conduct this investigation.
Suggested Answer and Working Notes:
As investigation involves a variety of situations, it is not possible to lay down any standardised procedure. However, usually, an investigation requires the following steps in order of sequence: Step 1. Determination of objectives and establishment of scope of investigation. Step 2. Formulation of the investigation programme. Step 3. Examination and study of various records by reference to appropriate evidence. Step 4. Analysis, processing and interpretation of findings. Step 5. Preparation of report and drawing up of conclusions.
Topics: Due Diligence, Investigation & Forensic Audit
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