Accounting vs Auditing – 20 Difference between Accounting and Auditing

Accounting vs Auditing

Difference between accounting and auditing are as under:

Accounting vs Auditing

Basis for comparison Accounting Auditing
1. Meaning Accounting is the art of recording, classifying and summarizing in terms of money transaction and interpreting the results thereof. Auditing is concerned with the verification of accounting data with determining the accuracy and reliability of accounting statements and records.
2. Scope Accountancy refers to the preparation of final accounts and its interpretations. Auditing refer to examination and checking of these records.
3. Nature Nature of accountancy is constructive and with current recording of business facts. Auditing is analytical in nature and essentially retrospective.
4. Objects The main object of accountancy is to ascertain the trading results of a business concern during a financial year. The objective of auditing is to certify the correctness and justification of the financial statement prepared by the accountant.
5. Qualification Legally no specific qualification is required for the appointment of an accountant. An auditor must be a chartered accountant, who has obtained a certificate of practice from ICAP and has established his own practice as an auditor.
6. Commencement When book-keeping records completed, they become available for beginning of work of accountancy. The work of auditing starts when the work of accountancy completed.
7. Knowledge An accountant needs not to be expert in the work of auditing. An auditor must have thorough knowledge of principles of accountancy otherwise he cannot perform his job.
8. Appointment Accountant is appointed by management of the company. The first auditor is appointed by the directors or by shareholders or by SECP while subsequent auditor is appointed by the shareholder of a company.
9. Duration Accounting work is undertaken throughout the year. Auditing is generally done at the end of the financial year.
10. Status An accountant is a permanent employee of the business. An auditor is not a permanent employee of the business. He may be changed year to year.
11. Report An accountant is not required to submit a report to the proprietor of the concern when the accounting work is over. An auditor is required to submit the report to the proprietor after the completion of his audit work.
12. Remuneration It is fixed by the management of the company. General rule is that remuneration of the auditor is fixed by the person making appointment. It is fixed by the shareholder of the company if his appointed by shareholder.
13. Removal Accountant can be removed by the management at any time. An auditor once appointed cannot be removed until the conclusion of next annual general meeting.
14. Liabilities An accountant’s liability is fixed by the management. he auditor’s liabilities are enumerated by the companies act and the Chartered Accountant Act.
15. Advice to client During the course of preparation of financial statements and their analysis the accountant has to suggest methods of improving the accounting system. Though an auditor give some advice to improve the same. But it should make clear that it is not statutory duty of an audit or as part of his. report.
16. Rights and duties The management of the organization determines the rights and duties of an accountant. The relevant law of chartered accountant laid down the rights and duties of an auditor.
17. Technique Accounting technique includes the recording of financial data, depreciation amortization valuation and interpretation of results. Auditing includes the examination of the financial record by youching verification and valuation.
18. Sequence of work The sequence of work is happening of any financial transaction, its recording, posting, taking the trial balance and finally preparation of the financial statements. An auditor’s work is started where an accountant ends his work the vouching verification valuation and reporting is the sequence of audit.
19. Necessity To know the result of business accounting is the necessity of every business either it is small or large. Auditing proves the authenticity of accounting record but it is not necessity of every business.
20. Influence Accounting is an employee and performs his duties under the influence of the management.  

An auditor does not accept the influence of the management because he is not employee of the business.


These are the major key differences between accounting and auditing.

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