Difference between accounting and auditing
The main difference is that accounting is preparing the books and auditing is checking if the book are prepared according to the applying framework. Back to a fundamental question, what is the difference between accounting and auditing from a financial perspective?
A quick answer is: Accounting is a process of preparing the works, Auditing is a process of evaluating & scrutinizing of the work prepared.
In other words, accountants are in charged of the day-to-day duties of maintaing the accounts, implementing the board financial strategy, if any. At the end of the period, accountant would produce Financial Statement, a summary report of the financial performance throughout the period. Whereas, auditor conduct a check on the accuracy of the financial statements, to ensure that there is no material misstatement of the financial statement prepared. Scope:
Accounting is related with preparing financial statements. Auditing is concerned with checking financial statements.
Accounting is related with current data.
Auditing is concerned with past data.
The purpose of accounting is to show performance and financial position of a business. The purpose of auditing is to certify true and fair view of financial statements.
It is constructive in nature.
It is analytical in nature.
The time period of accounting is usually twelve months (one year). It takes twelve months (one year) to complete records. The time period of auditing is less than one year. It may be completed within one month or may be more than one month.
When the work of bookkeeper ends then the accountant work starts. when the work of accountants ends Then the auditor work starts.
The accounting principles include accrual, going concern, prudence and consistency. The auditing principle include independence, objectivity, full disclosure and materially.
Accounting process includes amortization, depreciation and valuation. The auditing methods include manual and computerized.
Accounting methods include interest rate, depreciation rate, and installment payable. Auditing process include vouching, valuation and verification.
Accounting is not regulated by any code of conduct laid down by any institute. Auditing is governed by code of conduct prepared by institute of chartered accountants.
Accounting is necessity of every entity having any size. Auditing is not the necessity of every business.
Accounting cycle starts with journalizing and ends with final accounts. Auditing cycle starts with understanding clients system and ends with an opinion.
History or Background of business and accounting go side by side. History or Background of auditing is short as compared to accounting.
Accounting work involves no report to any party. Auditing work requires separate report to owners. Auditing is a full and critical examination of the books of accounts to find out their accuracy. So auditing begins where accounting ends.
Accountant is a man who supervises and analyses the work of a book keeper and finds out the results of a final accounts. Accounting is concerned with the preparation of the final accounts to show the results of the business at the end of the particular period. Modern accounting has become the foundation of the whole structure of commerce. It serves as eyes and ears to management.
He is a person who critically examines the record of accounts books, vouchers, balance sheet and profit and loss accounts. He satisfies about the accuracy of accounts. If the balance sheet does not represent the true picture of the business,...
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