Accounting VS Auditing

Accounting is systematically process of book keeping of an entity and preparation of financial statements at the end of the year that useful for internal and external users. Moreover, accounting capturing the day to day monetary transactions of the business and classifying them into various groups along with that. The main purpose of accounting is to to provide a company with clear, comprehensive, and reliable information about its economic activities and status of its assets and liabilities. There are statements for example the balance sheet, income statement, statement of changes in equity and statement of cash flow. Therefore, accounting can reveal the profitability and sustainability of an organization.

Auditing is the process of reviewing and investigating any aspect of a business, whether financial or nonfinancial to giving an opinion on audit report based on true and fair view. Auditors analyse and compare accounting reports and confirmation documents as well as verify conformity of a company's accounting such as financial statements with established standards and regulations for example US GAAP, IFRS and etc. Therefore, the main goal of an audit is to perform thorough evaluation of a company's financial records and reports and provide a company with improvement recommendations based on that evaluation.

Main Differences between Accounting & Auditing

Firstly, accounting is governed by Generally Accepted Accounting Principles (GAAP) and international accounting standards. In contrast, auditors check for accuracy or material misstatements and their auditing processes are governed by Auditing Standards. Both of accounting and auditing must obey the exclusive standard.

Secondly, in accounting the accountants produce the financial statements at the end of the financial year and it is continuous activity for every year. For auditing, auditors issue an opinion on whether the financial statements of a company present a true and fair when requirements of audit report and which is a periodic activity.

Thirdly, accountants provide financial management and other information necessary for effective decision making in the company. By contrast, auditors are not involved in the management of the company and clearly state in their report that the financial statements are the responsibility of the directors of the company.

Fourthly, accounting is a day-to-day process, while an audit takes place after a fixed period of time or after the occurrence of an extraordinary event such as fraud and etc. Therefore, accounting is necessary for every single business but audit is not necessary and it is optional to choose whether do or not to do the auditing.

Lastly, accountants are usually employees of the company for which they work, whereas, auditors are normally hired from an outside firm to verify the accuracy of the accountant’s work. Although not always the case, an auditor generally has no financial connections to the company unless is internal auditor.

References link below:

http://studypoints.blogspot.my/2011/09/what-is-difference-between-auditing-and_530.html

http://simplestudies.com/difference-accounting-auditing.html