18 Nov Accounting vs Auditing
Accounting vs Auditing is always a debatable topic. According to the U.S. Census Bureau, there are over 15 million people under the age of 65 in America who are employed full-time or part-time in accounting or auditing positions. With so many successful folks working in these fields, one would think that both audit and accounting are nearly synonymous terms that form an important cornerstone of society today.
However, there is a subtle yet crucial difference between the two terms that seperates them from each other – accounting is concerned with economic activity while auditing is focused on financial compliance and ethics. This article discusses both terms briefly before delving into their respective meanings further within this post for your comprehension needs. Let’s discuss Accounting vs Auditing.
Difference between accounting and auditing
Accounting: The process of accumulating and analyzing financial data for the purpose of planning, controlling and generating information.
Auditing: The process of making sure that a company is managing its funds properly and complying with the laws that govern financial activities such as accounting, taxation and securities law.
Even though both terms are used interchangeably in today’s modern society, there is a “silent” difference between the two terms that sets them apart from each other. As mentioned above, auditing is focused on financial compliance and ethics whereas accounting is not necessarily focused on these issues.
Accounting deals with data-driven analysis and planning while auditing deals with the actual physical operations of a business to make sure they comply with legal procedures. Some examples of auditing are internal control audits, financial statement audits, performance audits and so on. The purpose of auditing is to ensure that a company or business is operating in an effective manner while also being compliant with all laws and regulations.
For example, there are many different types of financial statement audits. One type is an opinion on the fairness of the financial statements that describes whether the statements fairly present the organization’s financial condition. Another type is an evaluation of accounting records for completeness, consistency and conformity with accounting principles. Both opinions require one to be proficient in their accounting skills as well as have a strong understanding of proper ethics in order to fulfil these types of work duties effectively.
Common between accounting and auditing
So, what do accounting and auditing have in common besides the fact that they share the same word in their names? At first glance, it may seem like not much since they focus on two completely different aspects of the business world. However, there is a very important link between both professions: financial data. Both accounting and auditing deal with financial data flow and accumulation for the purpose of problem identification and evaluation
For example, an accountant typically deals with financial data for internal operations while auditors deal with external operations of a business such as its suppliers and customers. Both fields deal with informational analysis and both require the collection of data to ascertain whether or not all is going well within a business organization.
The bottom line is, you need a Chartered Accountant and an auditor for your business to flourish. Thakur Chabert is a leading Accountants and Auditors firm in Uxbridge, London. Thakur-Chabert Limited is regulated by the ACCA (Association of Chartered Certified Accountants)
We offer a complete suite of services including Accounting, Taxation, Cloud Accounting, Audit, Company Secretarial Services, Business Advisory Services in London.