Accounting Vs Auditing — What’s the Difference

Cannot decide whether to study accounting or auditing? Accounting is the process of keeping updatedrecords of each financial transaction. On the other hand, auditing refers to the analysis and evaluation of financial statements created during accounting. This is done to check whether or not the statements are accurate. In auditing, there are steps taken to determine whether the statements have been prepared according to law. Read and know all about accounting vs. auditing.

Different Types of Accounting: At a Glance

Accounting is of various types. Each kind of accounting is focused on a specific aspect. Let’s find out:

Financial Accounting

Here, financial transactions for any business are recorded, analysed, and reported.

Tax Accounting

It is involved with tax matters for individuals or businesses. These include preparing tax statements, paying taxes, and filing tax returns.

Management Accounting

It is also known as managerial accounting. Managers use it to get an in-depth idea about financial data. They can present financial records in a very sensible way, which helps in decision-making processes driven by data.

Cost Accounting

Cost Accounting is about analysing a company’s cost structure, which includes the costs of services, goods, or other expenses involved with a business.

Social Responsibility Accounting

It is involved with the costs related to any business’s social or environmental welfare efforts.

Accounting Vs. Auditing: Top Differences

These are some of the top differences between accounting and auditing:

Documentation

Generally, accounting involves financial statement preparation and current financial transactions. Auditing, on the other hand, is concerned with the final financial statements assessment.

Consultation

Accountants often provide clients with data-driven advice about improving their financial position, while auditors only report on the accuracy and compliance of the financial data.

Deliverables

Accountants can deliver critical financial statements, such as balance sheets or income statements. Only an audit report is offered by auditors.

Accounts

Accountants make financial accounts for business entities and are involved with accounts in progress at each developmental stage. However, auditors focus on only final accounts.

Reporting

Accountants must send reports to clients or employers, whereas auditors must submit audit reports to legal entities or shareholders.

Payment

Accountants generally work for companies and draw a regular salary. An auditor works for an external agency and is paid a fee after audit preparation.

Scope

The employer or client determines the scope of accounting. The law determines the scope of auditing.

Employment

While most accountants work for a particular company, an auditor can work for many companies for auditing purposes.

Frequency of Work

While accounting is a constant practice, auditing is conducted as required periodically.

Conclusion

Accounting and auditing offer various benefits. Both roles are essential for managing risks, improving transparency, and making data-based decisions. With a top online coaching centre, you can get the best study preparation for accounting and auditing.