Differences between Accounting and Auditing
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.
There are significant differences between auditing and accounting;
1. Meaning
Accounting 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, to prove the true arid fair view of profitability and financial position.
2. Beginning of Work
Work of accounting begins when financial transactions take place but the work of auditing begins when the work of accounting ends.
3. Scope
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.
Accounting keeps the record of financial transactions but auditor checks and verifies the books of accounts.
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.
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.
An accountant remains responsible for the management but an auditor is responsible to the owners or shareholders.