Difference between Auditing and Accounting?
The main points of difference between accounting and auditing are:
Accounting
- Nature: It is constructive in nature as it is concerned with compilation of accounting information for preparing Profit and Loss Account and Balance Sheet.
- Scope: Its scope is restricted to preparation of financial statements and their interpretation.
- Qualification: No formal qualification has been recommended.
- Object: The main object is to find out operating results and financial position of the business.
- Commencement: It starts where book-keeping ends.
- Reporting: The Accountant is not required to submit a report on the accounts and statements prepared by him.
- Basis of Remuneration: The Accountant is paid monthly salary.
- Appointment: The Accountant is an employee of the business ordinarily on a permanent taxes.
- Level knowledge: An accountant is not required to have knowledge of audit techniques and procedures.
- Duration: The accounting work conducted throughout the year.
Auditing
- Nature: It is analytical in nature and is concerned with checking and verification of financial statements.
- Scope: It is determined by the agreement between auditor and his client.
- Qualification: An auditor must be a qualified Chartered Accountant.
- Object: The main object is to ascertain truth and fairness of financial statements and comment thereon.
- Commencement: It starts where accountancy ends.
- Reporting: The Auditor has to submit a report about correctness and presentation of accounts audited by him.
- Basis of Remuneration: The Auditor gets a fixed remuneration as per agreement with his client.
- Appointment: The Auditor is an independent outsider appointed on contractual basis for a year.
- Level knowledge: An Auditor must have knowledge of accounting as well audit techniques arid procedures.
- Duration: The Audit may be conducted at the end of the year or throughout the year.
