Question

 

Discuss the differences between auditing and accounting. What overlap in skills exists, if any, between auditors and accountants? How do the responsibilities of auditors and accountants differ? How are they similar?

Answer 1

Accounting

Accounting is the process of recording , classifying and summarizing the data in a systematic manner , transactions and event which are atleast of a financial character and interpretable the result . This shows that accounting is a first step and then auditing starts , accounting is made by accountant while auditing is done by auditor

Difference between Auditing and Accounting

- Accounting is continues and focus on the recoding and preparing all the financial transaction and statement whereas auditing is independent and focus on the critical evaluation and checking of the financial statement like income statement , balance sheet and provide best to the judgement

- Accounting is carried out with daily recording of financial transaction while auditing is periodic process and carried out after the preparation of final account , normally at the year end

- Accounting start where book keeping ends while auditing always start where accounting ends.

- Accounting concentrate for current financial transaction while auditing stress more on past financial statement

- Accounting cover all the transaction , records and statement while , auditing cover final financial statement and record

- Accounting involve checking verifying detail with the financial statement and records but auditing is made through test checking

- Objective of accounting is to determine the financial position of the company , profitability of the company while auditing aim is to add creditability of financial statement and accordingly prepare records.

Accountant

It is a person who keep or examine the records of the company , regarding money received , payment of money which are owned by the company , it may also define as person or company whose job is to prepare financial records of people , companies or organization , records are ledger accounts , income and statement account

Auditor

The person who conduct an audit is auditor and the company is required to appoint a person called auditor at each general meeting , an auditor is a person who authorize to review and verify the accuracy of financial record and satisfy that company work as per tax law , auditor also protect business from fraud by pointing out any discrepancy in accounting method

Auditor access the financial operation and ensure that organization run efficiently and effectively. And also trekking cash flow from beginning to the end and make sure that funds are properly accounted

Responsibility of Auditor and Accountant Differ

- Accountant are usually the employees of the company whereas auditor hired by the company from outside to verify the accuracy of the accountant work

- The work done by accountant is on daily basis while auditors work quarterly or annual accounting

- The work performed by accountant is as per international accounting standard while auditor work is as per auditing standard

- Accountant are basically required for a business while auditor is hired and option concept for the business.

- Accountant prepare financial statement for the company at the end of the year and auditor work to check the accuracy of the work done by the accountant

- Accountant work for a specific company while auditor moves from on company to another

Responsibility of auditor and accountant Similar

Accountant and audit to both work for the company they have joint responsibility towards the company to provide fair financial statement

An auditor will generally be an accountant who have perfect knowledge about the organization auditing procedure and processes

- The basic similarity is that both processes aim to ensure that records of the company provide accurate financial result