Difference Between Accounting and Auditing, Auditing Notes B.Com 6th Sem CBCS Pattern, Auditing Important Topics

Difference Between Accounting and Auditing

Auditing & Assurance

Difference between

In this article, we will Differentiate Between Accounting and Auditing 

Meaning of Accounting

Accounting is the analysis and interpretation of book-keeping records. It includes not only maintains of accounting records but also the preparation of financial and economic information Which involves the measurement of transaction and other events pertaining to a business.

According to the American institute of certified public accounts” The arts of recordings, classifying and summarizing in a significant manner and in terms of money transaction and events which in parts, at least of a financial charter and interpreting the result there of”.

Meaning of Auditing

The word audit is derived from the Latin word “AUDIRE” which means to hear. Initially auditor was a person appointed by the owners to check account whenever the suspected fraud, he was to hear explanation given by the person responsible for financial transactions. Emergence of joint stock companies changed the approach of auditing as ownership was pestered from management. The emphasis now is clearly on the verification of accounting date with a view on the reliability of accounting statement.

In the words of Montgomery, ”Auditing is a systematic examination of the books and records of a business or other organization, in order to ascertain or verify and report upon the facts regarding its financial operation and the result thereof”. 

Difference Between Accounting and Auditing 

1. Scope:  Accounting is concerned with preparing of financial statements. While Auditing is concerned with checking of financial statements.

2. Purpose: The purpose of accounting is to show the performance and financial statement. The purpose of auditing is to certify the true and fair view of financial statement.

3. Nature: Accounting is concerned with current data. It is constructive in nature. Auditing is concern with past data. It is analytical in nature.

4. Knowledge: Accounting works requires that accountant must have accounting knowledge. Auditing work required that an auditor must have accounting as well as auditing knowledge.

5. Status: The accountant is permanent employee of the business. The auditor is an independent person.

6. Start: The work of an accountant starts when the work of bookkeeper ends. The work of an auditor starts when the work of an accountant ends.

7. Qualification: An accountant may not be a Chartered Accountant as per law. An auditor must be Chartered Accountant as per Company Law 2013.

8. Principles: The accounting principles include going concern accrual consistency and prudence. The auditing principles include independence, objectivity, full disclosure and materiality.

9. Methods: The accounting methods include depreciation, amortization and valuation. The auditing methods include manual and computerized.

10 Techniques: Accounting technique includes depreciation rate, interest rate and installment payment. Auditing technique include vouching, verification and valuation.

11. Rules: Accounting is not governed by any code of conduct laid down by any institute. Auditing is governed by code of conduct as laid down by institute of chartered accountants of India.

12. Necessity: Accounting is necessity of every business entity whether small or large. Auditing is not necessity of every business.

13. Report: The accounting work requires no report to any party. The auditing work requires separate report to shareholders director or owners.

Difference between ACCOUNTANTS and AUDITORS       


The following points draw a line of demarcation between accountancy and auditing.

1. While Accountancy is mainly concerned with the preparation of summary and analysis of the records prepare by the book-keeper, auditing is the examination of the completed records.

2. While accountant ascertains the trading results of a business during a financial year, auditor certifies as correct the financial statements prepared by the accountant.

3. While an accountant is an employee of the business, an auditor is an independent outsider.

4. As an employee of the business, the accountant draws his monthly salary regularly from the business itself. An auditor, on the other hand, is paid a remuneration agreed upon between him and his client.

5. While an accountant is not expected to have a knowledge of auditing it is very essential for an auditor to possess a thorough knowledge of accountancy.

6. While an accountant is usually a permanent employee of the business, an auditor can be changed from year to year.

7. While an accountant does not submit his report on the financial statements prepared by him, an auditor has to submit his report to his client that the Balance Sheet and Profit and Loss Account give a true and fair view of the state of affairs of the business and are correct to the best of his knowledge and information supplied to him.

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