Difference between Accounting and Auditing

Accounting is referred to as the process of recording, classifying, summarising and interpreting the financial transactions, statements to determine the financial position of an organisation. Accounting is also known as the specialised language of the business.

Auditing, on the other hand, is referred to as the process of examining the financial records such as transactions and statements of an organisation in order to find any discrepancies during the process of recording of the transactions and also to verify the accuracy of the records.

Audit can be of two types namely, internal and external audit. Internal audit is conducted by an inhouse auditor while external audits are performed by auditors who are hired from outside.

They are generally appointed by the shareholders for the purpose of auditing the accounts of the organisation.

In this article we will be discussing the points of difference between accounting and auditing.

Accounting

Auditing

Definition

Accounting is referred to as the process of recording, classifying, summarising and interpreting the financial transactions, statements to determine the financial position of an organisation

Auditing is referred to as the process of examining the financial records such as transactions and statements of an organisation in order to find any discrepancies during the process of recording of the transactions and also to verify the accuracy of the records

Purpose

Accounting is done with the purpose of showing the position, profitability and performance of the business entity or organisation

Auditing is done to verify the accuracy of data presented by accounting. It is done with the purpose of revealing to what extent the true and fair view of records is maintained in the transactions

Objective

To determine profit and loss of the organisation or the financial position of an organisation for a period

To determine the correctness of all the recorded transactions

Mode of operation

Accounting is done on a daily basis, as transactions happen on a daily basis for any business

It is a periodical assessment and is done monthly, quarterly or yearly

Performed by

Accounting is done by accountants

Auditing is done by auditors

Sequence

Accounting starts at the end of bookkeeping

Auditing starts at the end of accounting

This article was all about the topic of Difference between Accounting and auditing, which is an important topic of Accountancy for Commerce students. For more such interesting articles, stay tuned to BYJU’S.

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