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

Below Table reprsents the Difference between Accounting and Auditing

Parameter of Comparison	Accounting	Auditing
Definition	Accounting is the process by which day-to-day monetary records of the organizations are maintained and are further utilized to prepare the financial statements. These financial statements give a true picture of business health.	Auditing is the process of a comprehensive evaluation of the financial statements or records prepared under the accounting process. The main purpose is to verify the reliability of the financial statements.
Initiation	Accounting takes the input from the books of account or bookkeeping i.e. daily transactions that involve sale or purchase of something and then utilize them to prepare financial statements of the organization.	Auditing starts when accounting work is completed. The financial statements prepared by the accounts function are verified to check the accuracy, completeness, and trustworthiness.
Mode of Operation	Daily i.e. continuous process	Periodic i.e. quarterly or yearly
Scope	Current: The scope of work involves the creation of current year financial statements.	Past: The scope of work involves validating the past financial statements.
Objective	The main objective of Accounting is to assess whether a company has earned profits or suffered losses, thus establish the current financial position of the organizations for that particular period.	The main objective of Auditing is to verify the correctness of the organization’s account and financial statements, thus certain or certify that they exhibit the true view.
Level of Detail	Very detailed as every financial transaction need to be captured	Sample-based
Key Deliverables	Financial statements e.g. Income Statement or statement of Profit & Loss, Balance Sheet, Cash Flow Statement, etc.	Audit Reports
Performed By	Carried by Bookkeepers and Accountants (internal employees of the organization)	Qualified Auditing agency or auditors (external & independent to the organization)
Regulated or Governed By	Regulated by Accounting Standards that are issued by Accounting Boards of the specific country, and which need to adhere while preparing the financial statements.	Regulated by Auditing Standards that are issued by Auditing Boards of the specific country and also certain international compliance laws that need to adhere while auditing the financial statements.
Reports Submission	To the management of the organization	To management, the board of directors, and shareholders

Skills of Auditors and accountants.

Accountants and auditors must be good with numbers. This does not mean a working knowledge of multidimensional calculus is necessary, since calculators and spreadsheets do most of the heavy lifting where math is concerned. Professionals in both careers, however, need to be quick and confident with quantitative analysis.

Under the broad umbrella of accounting are many fields, such as management consulting, that require dynamic, extroverted individuals who can establish rapport with C-suite employees and give confident presentations to boards of directors.

Moreover, accountants and auditors often work in teams to conduct such duties as preparing and reviewing financial statements, tallying inventory, and forecasting future sales

Overlapping Skill set

1. Analytical Skills

2. Highly Organised

3.Crtical thinking

4.Interpersonal Communication

5.Time management

Accounting and auditing draw from the same talent pool and, for the most part, require similar skill sets. However, subtle differences exist.

Auditors’ Responsibilities

The auditor’s responsibility is to express an opinion on whether management has fairly presented the information in the financial statements. To do so, the auditor collects evidence to obtain reasonable assurance that the accounts are free of material misstatement.

Accountants Responsibilities

An accountant is a professional who is responsible for keeping and interpreting financial records. Most accountants are responsible for a wide range of finance-related tasks, either for individual clients or for larger businesses and organizations employing them.

Difference bewteen an Auditor and Accountant

Accounting requires a person who is more detail-oriented and focused. Small mistakes can cost millions, particularly for large companies dealing with massive sums of money. As an accountant, it reflects poorly on you when an auditor comes in behind you and discovers errors. Auditors must value attention to detail, but they also need strong investigative skills.

In addition to capturing honest mistakes, a good auditor is called upon to detect subterfuge, fraud, and intentional misstatements. The companies that perpetrate such chicanery are generally rat hiding it, which is why preternatural detective skills are so valuable for an auditor