Business

Difference Between Accounting and Auditing

Main difference

The main difference between Accounting and Auditing is that Accounting is an act of orderly capturing the daily monetary transactions of the company and classifying them into various groups, and Auditing is an activity of verification and evaluation of financial statements.

Accounting versus auditing

Accounting is an action of keeping the monetary records of a company in a way that can help in the preparation of financial statements that will give a true and fair view of the business of the company. While auditing is the evaluation of financial records/statements prepared through the accounting function. The objective is to ensure the reliability of the financial statements. Accounting Standards are issued by International Accounting Councils, which must be followed when preparing financial statements. On the other hand, the International Boards of Audit issue the Auditing Standards, which must be adhered to when auditing the financial statements. Accounting aims to provide a true and fair view of the financial statements to various users, and the objective of the audit is to verify the reliability of the true and fair image of the financial statements. In accounting, the work is done by bookkeepers and bookkeepers, while in auditing the work is done by auditors. An accountant is part of the mid-level management of the organization. In this case, the task is to present a true and fair picture of the financial situation of the company to the various stakeholders. In contrast, an auditor can be both internal and external to the organization. In a way, the level of responsibility of the auditor is higher than that of the accountant. The report published by them is a certification of the work done by the accountant. The task is to present a true and fair image of the company’s financial situation to the various stakeholders. Conversely, an auditor can be both internal and external to the organization. In a way, the level of responsibility of the auditor is higher than the accountant. The report published by them is a certification of the work done by the accountant. The task is to present a true and fair image of the company’s financial situation to the various stakeholders. Rather, an auditor can be both internal and external to the organization. In a way, the level of responsibility of the auditor is higher than that of the accountant. The report published by them is a certification of the work done by the accountant. The task is to present a true and fair image of the company’s financial situation to the various stakeholders. Rather, an auditor can be both internal and external to the organization. In a way, the level of responsibility of the auditor is higher than that of the accountant. The report published by them is a certification of the work done by the accountant. The task is to present a true and fair image of the company’s financial situation to the various stakeholders. Rather, an auditor can be both internal and external to the organization. In a way, the level of responsibility of the auditor is higher than that of the accountant. The report published by them is a certification of the work done by the accountant.

Comparison chart
Accounting Auditing
Accounting means consistently keeping the records of the accounts of a structure or organization and the planning of the financial statements at the end of the financial year. Audit means an examination of the books of accounts and financial statements of an organization.
Target
Show the execution, profitability and financial position of an organization. To show the fact, to what extent the financial statement of an organization offers a faithful and truthful vision.
start
Accounting begins where accounting ends. Auditing begins where accounting ends.
Period
Accounting is a continuous process. The audit is a periodic process.
Work made by
Accountant Auditor
Ruled by
accounting standards auditing standards

What is contability?

Accounting is the systematic and complete recording of a company’s financial transactions. Accounting is also related to the process of summarizing, analyzing and reporting these transactions to supervisory agencies, regulators and tax collection entities. Financial statements that summarize the operations, financial position, and cash flow of a large company during a particular period are a concise summary of hundreds of thousands of financial transactions that it may have conducted during this period. Financial statements that summarize the operations, financial position, and cash flows of a large company for a specified period are concise statements based on thousands of financial transactions. Therefore,

Accounting is one of the main functions of almost any business. It can be handled by a bookkeeper or accountant in a small business, or by large finance departments with dozens of employees in larger companies. The reports generated by many accounting streams, such as cost accounting and management accounting, are invaluable in helping management make informed business decisions. While a bookkeeper may handle basic accounting functions, advanced accounting is typically handled by qualified accountants who hold designations such as Certified Public Accountant, Chartered Accountant, Certified General Accountant, or Certified Management Accountant.

What is the audit?

Auditing is an objective examination and evaluation of an organization’s financial statements to ensure that the records are a fair and accurate representation of the transactions they claim to represent. The audit can be performed internally by employees of the organization or externally by an external firm. Third party auditing of private companies can be extremely helpful in removing any bias when it comes to a company’s financial status. The audit looks for what can be called a “material error” in the declarations about any particular object. They help stakeholders gain a sense of accuracy regarding the status of the audited topic and can help them make better, more informed decisions regarding the audited topic.

Almost all companies perform an audit once a year, while even the largest companies may receive audits on a monthly basis. For some companies, audits are a legal obligation because of the powerful incentives to intentionally misrepresent financial information in an attempt to commit fraud. For some publicly traded companies, auditors are used as a resource to assess the effectiveness of internal controls over financial reporting.

Key differences

  1. Accounting is an art of organizing, keeping records of monetary transactions and preparing the company’s financial statements. The audit is a systematic task that involves the independent evaluation of financial information to express an opinion on the true and fair view.
  2. Accounting is a simplified task, which is done by accountants, but auditing is a difficult task, so auditors are required to perform it.
  3. The primary purpose of accounting is to reveal the profitability position, financial position, and performance of the organization. Whereas, the audit is to verify the accuracy of the financial statement.
  4. Accounting is governed by accounting standards, while auditing standards govern auditing.
  5. The end of accounting is the beginning of auditing.
  6. Accounting is a continuous activity. Unlike the audit, which is a periodic activity.

Final Thoughts

Although accounting requires a complete knowledge of accounting rules, principles, conventions and assumptions, as well as the rules of the Companies Act and tax laws. The audit procedure is carried out only when the accounting is done correctly; cannot be neglected.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button