Classification of investigation


Classification of investigation has following types

1. Evaluation investigation                     4. Analysis investigation
2. Review investigation              5. Special audit
3. Survey investigation              6. Statutory investigation

1. Evaluation Investigation:
Evaluation investigation is conducted to determine the real worth of business proposed to be purchased or sold, or to determine the performance of machinery or efficiency of the personnel of an organization. In case of proposed purchase of business, the investigation relates to valuating the assets and liabilities and ascertaining the present earning potential and future prospects. In case of sale of business, net worth of business is determined. In case of evaluation of machinery and personnel, the performance of machinery and efficiency of personnel is determined.

2. Review Investigation:
Review investigation is usually conducted to determine the reliability of business data, or to ascertain the compliance with the terms of a contract. Where payment of commission, royalty, subsidy or similar items is based on output or turnover, investigation shall be conducted to determine the correctness of data provided by the party. The secured creditors may desire to know that the borrower has, in fact created a charge, as agreed, on the assets in their favour.

3. Survey Investigation:
Survey investigation is conducted to determine the accounting system, costing methods, manpower efficiency and similar matters. A survey of accounting system, may be carried out to overcome the weaknesses pointed out in audit report, to introduce a budgetary control system, or necessity of strengthening internal check or introduction of internal audit. A survey of cost system may be with a view to improve existing procedures. A survey of manpower may be undertaken to determine the real number of employees required, surplus staff, inefficient workers, etc.

4. Analysis Investigation:
Analysis investigation is conducted with a view to facilitate the decision making by top management in areas of vital importance like price fixation, cost of products or services, reasons for increase in price, ways to control them.

5. Special Purpose Audit:
Special purpose audit is in fact an investigation conducted with a  view to determine fraud, losses caused by fire, loss of production due to machinery breakdown, loss of profit as a consequence of fire.

6. Statutory Investigation:
Companies Ordinance provides for statutory investigation in section 263 to 282. Such an investigation may be made on:
a. The report of register of companies.
b. The application of members of the company.
c. In other cases like special resolution of company or under court order.
a. On report of register section 263 (1):

The Securities and Exchange Commission upon a report by the registrar of companies, under section 261 (6) appoint inspector to investigate the affairs of the company and to report thereon, (Section 163(1)).
If the company does not furnish the information required by the registrar, under section 261 (1) within the time allowed or if the information submitted disclose an unsatisfactory position or does not disclose full and fair position, the registrar shall report the position to commission whereupon the commission may order investigation.

b. On application of member section 263 (1) & 264:
Securities and Exchange Commission may appoint inspector to investigate the affairs of any company and to report thereon in such manner as Commission may direct:
Such appointment shall be made as under:
i. In case of company having share capital on the application of members holding at least one-tenth voting powers.
ii. In case of company not having share capital on the application of at least 1/10th of members.
The application by members must be supported by such evidence as the Commission may require, supporting their claim for investigation. The applicant shall also give security for the payment of cost of investigation, section 264.

c. Investigation in other cases section 263 (1):
Securities and Exchange Commission may order investigation, according to section 265, in the following two circumstances:
a. When company passes a resolution in general meeting required investigation.
b. When investigation is ordered by the court.
  • When investigation is mandatory section 265 (a)
The shareholders, by a resolution, desire the commission to appoint inspector to investigate the affairs of the company. They need not specify the circumstances in the resolution due to which they desire investigation. This right can be exercised in whosoever hand the company may be i.e. director, receiver appointed by debentures holders, administrator appointed by the court.
  • When investigation is discretionary section 265 (b)
Securities and Exchange Commission may appoint inspector to investigate company’s affairs if in its opinion there are circumstances suggesting.
a. That the business is conducted with intention to defraud creditors, members or any other person.
b. Company was formed fraudulent or unlawful purpose.
c. Person involved in formation or management is guilty of fraud, misfeasance or other misconduct.
d. Members have not been given full information.

Powers of Inspector

1. Investigate affairs of any other company in the same group.
2. Require officer to produce books, etc, and to assist.
3. Require anybody corporate to give information.
4. Keep books and papers in custody.
5. Examine officers on oath.
6. Seize books and papers.
Inspectors report section 269
The inspector may make interim report, or on the conclusion of investigation shall make a final report to the Commission.

Comments

Post a Comment

Popular posts from this blog

What is the Dynamic Theory of Profit

Image
Clark's Dynamic Theory of Profit And Its Criticism The Dynamic Theory of Profit is associated with the name of an American Economist, J. B. Clark. In the world of reality, according to J. B. Clark, profit arises only in a dynamic economy. An economy is said to be dynamic when there is a change in population growth or change in the method of production or a change in the consumer’s wants, etc. A society which is without these changes is called a static society. In a static society, only monopoly profits continue to exist. All other economic profits are gradually eliminated by competition. In a dynamic society, an entrepreneur is always confronted with continuous unpredictable changes in demand for his product. The variation in demand may take place due to changes in fashions, tastes, the standard of living, distribution of income, population, new inventions, international repercussions, technological advances, etc. A prudent entrepreneur will always keep an eye on future demand
Read more

Compare the anatomy of Bifacial and Isobilateral leaves

BIFACIAL LEAF: It is also called dorsiventral leaf. This leaf is more strongly illuminated on upper surface than on lower surface. This unequal illumination induces a difference in the internal structure between upper and lower sides. Its internal structure shows: (1)        Upper Epidermis This is single layer of cells with thick cuticle which checks excessive evaporation of water from the surface. It does not contains chloroplasts, stomata are also absent. (2)        Lower Epidermis This is also single layer but with a thin cuticle. It bears many stomata, two guard cells of which contain some chloroplast, none are present in the epidermal cells. Internal to each stomata is large cavity called respiratory cavity. Lower epidermis of leaf is meant for exchange of gases (oxygen and carbon dioxide) between the atmosphere and the plant body. Excess water also evaporates from lower epidermis. (3)        Mesophyll The ground tissue lying between upper epidermis and th
Read more

osmoregulation in terrestrial and aquatic animals

Mechanism of osmoregulation is very important for all groups of animals whether inhibting land or water. Unlike plant cells, animal cells when placed in hypotonic solution burst due to the continuous absorption of water. On the contrary they would shrink and die if constantly placed in hypertonic solution. Normally uptake and loss of water are in balance for proper survival of cell. (1)        Osmoregulation in terrestrial animals: Terrestrial animals are more likely to loose water by evaporation through their permeable surfaces exposed to amsophere. Among various animal groups only Arthropods and vertebrates became the most successful land dwellers. They have developed number of strategies to maintain osmoregulation of their body fluid. (a) Water proof external coverings: To prevent water loss through external surfaces, vertebrates like reptiles, birds and mammals have water proof keratinized epidermis. Similarly the insects have developed external water proof layer called
Read more