“Auditing” and “Accounting” both have generally similar concepts. But their roles are often confused with each other. Well, both Auditing and Accounting deal with finance. But they are different from each other. In this blog, we discuss Auditing vs Accounting and which one is better between both.
Let’s start with discussing the overview of Auditing and Accounting.
Overview of Auditing
Auditing is an essential term in accounting. It explains the examination and confirmation of the company’s financial records. An external third party performs it.
Functions of Auditing
- Verify documents ( by comparing assets and liabilities)
- Tests the financial statements created by accountants
- Recommend new policies and plans
- Update audit programs and questionnaire
Overview of Accounting
Accounting is the well-organized recordation of a company’s financial transaction. The main motive of accounting is to accumulate and record the company’s financial performance, cash flow, and financial position. This information is further used to decide how to manage the business, invest in it, or lend money.
What are the functions of Accounting?
The functions of Accounting are as follows:
- Control of Financial Policy
- Formation of Planning
- Preparation of Budget
- Cost Control
- Evaluation of Employees Performance
- Prevention of Errors and flows
So, now we move to learn the Difference between both Auditing vs Accounting.
- Bookkeeping vs Accounting
- Quick Guide on What is the Purpose of Accounting for Students
- Top 7 Interesting Uses of Accounting
Auditing vs Accounting
|Points of Differences||Auditing||Accounting|
|Regulators||Auditing Standards are issued by the International Auditing Board. This needs to be attached while auditing the financial statement.||Accounting Standards are issued by the International Accounting Board, which is also needed to attach while accounting the financial statement.|
|Aim||To verify the genuine and honest view of the financial statement.||To provide an accurate and fair use of the financial statement.|
|Main Categories||Auditing is mainly divided into two parts:Internal Auditing: It is generally done by the management for process improvement and preventive purposes.External Auditing: External Auditing is generally legal.||A few types of accounting are as follows:Financial AccountingManagerial AccountingGovernment AccountingCost AccountingSocial Benefit AccountingHuman Resources Accounting|
|Work Performed By||Auditors need accounting knowledge. Without knowledge, an auditor can not certify the financial statement. In contrast, an accountant needs now to know the auditing processes.||Bookkeepers and Accountants|
|Skills required||Some skills which are required for Auditing are the following:|
Knowledge of both Auditing and Accounting is a must.Able to understand the financial statements and also financial transitions effects on the financial statement.Analytical SkillsUnderstanding the company’s accounting framework and identifying the risk areas, controls, processes, etc.
|The skills which needed to know for Accountant are:|
Accounting standards’ knowledgeAbility to take time and measured decisionUnderstanding various revenue figuresunderstand company’s risk and return trade-off Judge financial accounts and give reasonable opinions based on knowledge and experience.
|Day to day activities||Auditors day to day activities includes:Preparing financial reports for financial statement users.Understanding the financial statements of a companyDocument verification to establish an audit pathIdentify the critical risk areas and suggest the best ideas to control them.Performing various processes to understand how the flow of information/Accounting works in the organization.||Daily activities of Accountant include:Maintain Books and AccountsMonitor the actual spending as well as the budgetMaintain proper documentation and records for the audit process.Prepare the business models/budget that helps the company to predict the future.Planning financial reports for the business.|
|Responsibilities||An auditor can be internal and external to the organization. In the case of internal, they can be a part of an organization. The external company chooses a certified auditing firm that is famous in the industry. |
The responsibility of an auditor is more than an accountant.
|An accountant is a part of an organization. An Accountant’s responsibility is to present the company’s accurate and fair financial position to various stakeholders.|
|Starting Point||When the accountant’s job is complete then, the auditor’s job is started. When the financial statements are ready, auditors check the completeness and accuracy of financial statements.||The starting point of accounting is Bookkeeping. The accountant maintains the financial records of the company. These financial records are further used to make financial statements of the company. |
|Period||This is periodic activity. In most countries, an Audit is a legal requirement. Many companies prefer to hire an audit on a quarterly basis.||This is an ongoing activity. The financial statements can be made annually and quarterly. But recording journal entries and other accounting functions are a continuous process. |
Which one is better, Auditing and Accounting?
Well, Both Auditing and Accounting are two different functions of finance. Both require the knowledge and degree of accounting. Both work together to ensure the company’s records accurately and reflect its financial position.
Auditing is not always mandatory to the organization, but accounting guides company economic decisions. Although, both are particular fields of finance. Both fields require a better understanding of an entity’s industry, accounting standards, rulings, and regulations.
It is hard to choose which one is better as both purposes are the same and equal for an industry. It depends on your interests and personality which career path you can choose.
If you like to create things from raw numerical data and it sounds fun, you can choose Accounting. On the other hand, If you love to put out errors and inequalities in someone else’s work, you can prefer Auditing.
Do you know the average salary of Auditors and Accountants?
The annual salary of an auditor is $62,895.
Well, the salary depends on the year of experience. If you have experience of less than 1 year, your average salary is $58,430. And If you have more than 10 years of experience, this will be $76328.
The average pay of an accountant is $79,520. The lowest accountant salary is $44,480, and the highest one is $124,450.
To Sum Up
Thus, the terms Auditing vs Accounting is similar. Both are the two functions of finance. An auditor cross-checks the work done by an accountant. An auditor’s job has no meaning if the framework of accounting is not established in the company.
Also, the two work simultaneously, especially in the case of setting up the processes. The controls are created and completed by the accountant and then tested by the auditor.
Moreover, if you are looking to make your career in both fields, you are on the right path. As both paths give you good pay, along with that job security and lots of higher mobility. Get the best auditing assignment help from the experts.
Frequently Asked Questions
What are the similarities between Auditing and Accounting?
Auditing and Accounting are two different functions of finance. The similarities between both are as follows:
Both need the knowledge and degree of accounting.
Both work together to assure the company’s records correctly and show its economic position.
Why Auditing is vital for a company?
An audit helps a company a lot. As it helps an association to set up the financial statement. It gives the shareholder confidence that the accounts are accurate and fair. It also helps the company to develop internal controls and systems.