Differences between Auditing and Accounting

Differences between Auditing and Accounting

Accounting and Auditing are two very important processes related to the financial activities and records of an organization. Accounting is related to the collection, recording, analysis, and interpretation of financial transactions but auditing refers to the examination of books of accounts along with the evidential documents. The end of Accounting is the start of Auditing.

Differences between Auditing and Accounting –

The following differences can be shown between auditing and accounting:

  • Meaning

Accounting is keeping records of financial transactions and preparing financial statements. It is the act of collecting, recording, analyzing and interpretation of financial transactions but auditing is the act of examination of books of accounts and evidential documents, so as to prove the true and fair view of profitability and financial position. Auditing is a critical examination of the financial statements to give an opinion on their fairness.

  • Beginning of Work

Accounting starts usually where book-keeping ends; while auditing always starts where accounting ends.

  • Scope

The scope of accounting is determined by the management of the company; while the scope of auditing is determined by the relevant laws or regulations. Accounting prepares profit and loss account and balance sheet and other statements as per the instruction of auditor but auditor checks the books of accounts considering their fairness as well as complying with the provision of company act or not.

  • Legal Status:

Accounting is governed by Accounting Standards with some degree of discretion, but auditing is governed by Standards on Auditing and does not provide much flexibility.

  • Focus:

The primary focus of accounting is to accurately record and present all financial transactions and statements; while the primary focus of auditing is to verify the accuracy and reliability of the financial statements

  • Nature of Work

Accounting keeps the record of financial transactions but auditor checks and verifies the books of accounts. Accounting is a continuous activity. Unlike Auditing, which is a periodic activity.

  • Staff

An accountant is a staff of an organization and draws the salary from the business but an auditor is an independent person who is appointed for a specific period and gets a sum of remuneration.

  • Preparation of Report

An accountant does not prepare a report after the completion of his task but he has to give information to the management when needed but the auditor needs to prepare and present a report after the completion of his work to the concerned authority.

  • Responsibility

An accountant remains responsible for the management but an auditor is responsible to the owners or shareholders. Accountant’s liability generally ends with the preparation of the accounts; while the auditor has liability after preparation and submission of the audit report.


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