Accounting and auditing are two different activities involving various tasks and duties. Whether you are a business owner or a student that can’t decide what course to choose, this article will come in handy. It sheds light on accounting and auditing, their definitions, critical differences, and some similarities.
Auditing: Definition
Auditing is a regularly executed analysis of a business’s financial records to ensure transparency and accuracy. Informally, auditors are a monetary committee that examines accountants’ work. That is, only after accountants complete their work can auditors proceed to review it.
In reality, though, it’s more complicated than just an examination. First, auditors perform three widely known types of audits:
- Internal Revenue Service (IRS) audits
- External audits done by third parties
- Internal audits exercised by competent people in the organization
Moreover, auditors’ work entails:
- Accounting system effectiveness
- Budgeting and strategic planning precision
- Statutory compliance
- Fraud detection and avoidance
Accounting: Definition
While auditors work with organized data and records, accountants deal with raw records, cash flow, liabilities, and assets. Accounting is an activity responsible for checking financial data, counseling on financial matters (including fiscal aspects), building various financial plans, strategies, and models, and completing transactions according to the regulations, laws, and rules. Among other things, accountants usually:
- File tax reports and returns
- Analyze expenditures
- Compose financial statements
- Build money-saving plans
- Give advice for financial institutions or company departments
- Follow tax laws and rules
Other than that, accountants are often snowed under with the paperwork, including:
- Profit and loss statements
- Profit margins
- Monthly, quarterly, and annual costs of doing business/saving resources
- Brand’s growth over time
- Employee count
- Market share of the corporation
Main differences between Auditing and Accounting
As can be seen from the definitions, auditing and accounting are two different practices with one primary goal – to ensure the company’s books are transparent and credible. Below are a few central elements that make auditing and accounting different. Read on to learn more.
Education
Although both practices require getting a Bachelor’s degree, the number of courses students have to attend differs. Classes will be different depending on the path students choose. Some lectures will be relatively simple, while others will prove difficult. If that’s the case, you can easily reach expert services and get auditing or accounting assignment help quickly and efficiently.
Job prospects
While both careers are promising, success depends on a person’s passion and diligence. An accountant can work for a private company or government institution, and so can an auditor. But let’s not forget that their duties involve performing different tasks.
Starting salary
The salary of an accountant and auditor hinges upon numerous factors. First, your education, experience, and location are pivotal in your paycheck. According to top firms, an auditor or accountant earns from $50,000 to $90,000 annually.
Needless to say, you may make less if you work at a small company. Importantly, keep in mind that today’s starting positions are versatile in terms of salary. That is, you can negotiate with the recruiters about the starting paycheck. If your prowess is impressive and your experience is ample, there is a high chance that the managers will agree to your terms.
Level of detail
As said above, accounting does all the dirty work. Accountants have to check every financial transaction and peruse every amount gone through the company. This is done to create clear statements and reports analyzed by auditors.
Speaking of auditors, they primarily work with papers created by accountants. Of course, that doesn’t mean that the auditor’s work is a walk in the park. They still have to approach every document earnestly to ensure it doesn’t have traces of money laundering, tax fraud, etc. Sometimes, auditors have to do double work and retrieve old papers to ensure the newest statements are correct.
Objective
Accountants strive to identify the business’s financial position, performance, profitability, and success. Professionals gather and process every transaction to make sure the brand goes in the right direction economic-wise. Auditors aspire to control whether accountants provide comprehensive statements and reports. They rebuild financial procedures to make sure everything is crystal clear.
Legal Status
Accountants are governed by Accounting Standards. Auditors are governed by the Standards of Auditing. Both are fundamental rules of performing tasks. However, it would be reasonable to add that the former has some flexibility while the latter does not.
Type of checking
Accounting covers any detail and can’t omit anything related to the company’s finances. Auditing allows competent people to randomly pick financial statements and records and perform sample or test checking.
Remuneration type
Accountants primarily work at the given company and are on a salary. Independent auditors (excluding those who perform internal auditing checks) get a specific fee for auditing performed.
Deliverables
Accountants work with a wide range of deliverables, with Balance Sheets, Cash Flow Statements, and Income statements being the most common ones. In contrast, auditors mainly deliver Audit Reports.
What do Accounting and Auditing have in common?
Accounting and auditing share several things in common. Regardless of position, one needs to have the following list of skills:
- Mathematics: Whether you decide to become an accountant or auditor, having excellent and unprecedented math skills is necessary. Make sure to learn basic and complex mathematical operations.
- Problem-solving: Accountants employ problem-solving abilities to make sure books are unparalleled. Auditors, in turn, apply these skills to understand accountants’ moves and whether those steps are justified and legal.
- Computer prowess: Multiple tools for auditors and accountants exist, and they get upgraded now and then. Using such apps is necessary to make the work as effective and productive as possible.
- Writing: Every professional must know how to issue a report or statement quickly and efficiently.
Accounting and auditing have several similar elements, but they are entirely different activities. In short, accounting focuses on creating statements and reports and making books clear and legal. Auditing aims to analyze official papers composed by accountants and decide whether such documents are correct. Finally, whatever career path you choose to go, remember to get the necessary education and skills.
