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Accounting vs. Auditing: Know the Difference

Shumaila Saeed
By Shumaila Saeed || Updated on December 25, 2023
Accounting involves recording, summarizing, and reporting financial transactions, whereas auditing is the examination and verification of a company's financial records.
Accounting vs. Auditing

Key Differences

Accounting is primarily concerned with the accurate recording and reporting of financial transactions. It involves the process of documenting all financial activities of a business. Auditing, on the other hand, focuses on evaluating the accuracy and validity of the financial records and statements prepared by accountants.
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Dec 24, 2023
Accountants are responsible for preparing financial statements, managing ledgers, and ensuring compliance with accounting standards. Auditors assess the accuracy of these financial statements, ensuring they present a true and fair view of the company's financial position.
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Shumaila Saeed
Dec 24, 2023
Accounting is an ongoing, day-to-day activity that tracks the financial health of an organization. Auditing, in contrast, is typically a periodic activity, conducted quarterly or annually, to inspect and validate financial records.
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Dec 24, 2023
Accounting professionals may include bookkeepers, accountants, and financial analysts who handle various aspects of financial documentation and reporting. Auditors are usually external professionals or firms specializing in examining financial statements and accounting practices for accuracy.
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Shumaila Saeed
Dec 24, 2023
The outcome of accounting work is the creation of financial statements such as balance sheets, income statements, and cash flow statements. The result of an auditing process is an audit report that provides an opinion on the accuracy of the financial statements.
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Comparison Chart

Primary Function

Recording and reporting financial data
Examining and verifying financial records
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Dec 24, 2023

Role in Management

Ongoing financial management
Periodic evaluation of financial records
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Dec 24, 2023

Nature of Activity

Continuous and routine
Periodic and evaluative
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Dec 24, 2023

Professional Involvement

Accountants, bookkeepers
Independent auditors
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Outcome

Financial statements
Audit report
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Accounting and Auditing Definitions

Accounting

The process of recording financial transactions.
Accounting for all sales and purchases is crucial for financial transparency.
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Shumaila Saeed
Dec 14, 2023

Auditing

Examining financial records for accuracy.
Regular auditing helps in maintaining financial integrity.
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Shumaila Saeed
Dec 14, 2023

Accounting

Managing and analyzing financial information.
Good accounting practices help in strategic business planning.
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Shumaila Saeed
Dec 14, 2023

Auditing

Verifying the correctness of financial statements.
Auditing confirmed the accuracy of their financial reporting.
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Shumaila Saeed
Dec 14, 2023

Accounting

Tracking assets, liabilities, and equity.
Accounting ensures accurate tracking of the company's assets.
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Dec 14, 2023
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Auditing

Ensuring compliance with financial standards.
The external audit assessed compliance with accounting standards.
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Accounting

Preparing financial statements and records.
The accounting department prepares the balance sheet annually.
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Shumaila Saeed
Dec 14, 2023

Auditing

Providing an independent assessment of financial records.
Independent auditing provides confidence to stakeholders.
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Shumaila Saeed
Dec 14, 2023

Accounting

The practice or profession of maintaining the financial records of a business, including bookkeeping as well as the preparation of statements concerning the assets, liabilities, and operating results.
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Shumaila Saeed
Dec 13, 2023

Auditing

An examination of records or financial accounts to check their accuracy.
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Dec 13, 2023

Accounting

Present participle of account
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Dec 13, 2023

Auditing

An adjustment or correction of accounts.
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Shumaila Saeed
Dec 13, 2023

Accounting

(business) The development and use of a system for recording and analyzing the financial transactions and financial status of an individual or a business.
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Shumaila Saeed
Dec 13, 2023

Auditing

An examined and verified account.
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Dec 13, 2023

Accounting

A relaying of events; justification of actions.
He was required to give a thorough accounting of his time.
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Dec 13, 2023

Auditing

A thorough examination or evaluation
An audit of water use.
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Accounting

(law) An equitable remedy requiring wrongfully obtained profits to be distributed to those who deserve them.
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Dec 13, 2023

Auditing

To examine, verify, or correct the financial accounts of
Independent accountants audit the company annually. The IRS audits questionable income tax returns.
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Dec 13, 2023

Accounting

A convincing explanation that reveals basic causes;
He was unable to give a clear accounting for his actions
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Dec 13, 2023

Auditing

To attend (a course) without requesting or receiving academic credit.
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Shumaila Saeed
Dec 13, 2023

Accounting

A system that provides quantitative information about finances
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Shumaila Saeed
Dec 13, 2023

Auditing

To examine or evaluate (something) thoroughly
Audit a house's energy consumption.
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Dec 13, 2023

Accounting

The occupation of maintaining and auditing records and preparing financial reports for a business
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Shumaila Saeed
Dec 13, 2023

Auditing

To conduct an audit.
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Shumaila Saeed
Dec 13, 2023

Accounting

A bookkeeper's chronological list of related debits and credits of a business; forms part of a ledger of accounts
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Shumaila Saeed
Dec 13, 2023

Auditing

Present participle of audit
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Dec 13, 2023

Accounting

A statement of recent transactions and the resulting balance;
They send me an accounting every month
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Dec 13, 2023

Auditing

The act or result of performing an audit.
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Dec 13, 2023

Accounting

Summarizing and reporting financial data.
Through accounting, the company presents its financial status quarterly.
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Shumaila Saeed
Dec 14, 2023

Auditing

Evaluating the effectiveness of financial controls.
Auditing can reveal weaknesses in internal financial controls.
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Shumaila Saeed
Dec 14, 2023

Repeatedly Asked Queries

What is accounting?

Recording and reporting financial transactions.
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Shumaila Saeed
Dec 24, 2023

What is auditing?

Examination and verification of financial records.
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Shumaila Saeed
Dec 24, 2023

Who performs accounting?

Accountants and bookkeepers within an organization.
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How often is accounting done?

Continuously, as financial transactions occur.
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Dec 24, 2023

What are common accounting methods?

Accrual and cash basis accounting.
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Dec 24, 2023

Who conducts audits?

Usually external auditors or audit firms.
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Shumaila Saeed
Dec 24, 2023

Are accounting reports used internally?

Yes, for management and operational decisions.
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Dec 24, 2023

How frequently are audits conducted?

Typically annually or as required.
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Dec 24, 2023

Is auditing mandatory for all companies?

Generally for public companies and others based on regulations.
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Dec 24, 2023

What is the role of an accountant?

Accountants are responsible for maintaining financial records, preparing financial statements, and ensuring compliance with accounting standards and tax regulations.
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Shumaila Saeed
Dec 24, 2023

Is accounting only about recording transactions?

No, it also involves analyzing and interpreting financial data.
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Shumaila Saeed
Dec 24, 2023

Are tax audits different from financial audits?

Yes, tax audits focus on compliance with tax laws, while financial audits assess financial statement accuracy.
Shumaila Saeed
Shumaila Saeed
Dec 24, 2023

How do accounting and auditing differ?

Accounting involves recording and reporting financial data, while auditing involves examining and verifying that data for accuracy.
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Shumaila Saeed
Dec 24, 2023

Can a company perform auditing without accounting?

Auditing relies on accurate accounting records, so accounting is a prerequisite for auditing.
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Shumaila Saeed
Dec 24, 2023

Why do companies undergo compliance audits?

Compliance audits ensure that an organization adheres to legal and regulatory requirements in its operations.
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Dec 24, 2023

What does an audit report include?

An opinion on the accuracy of financial statements.
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Dec 24, 2023

Is accounting limited to businesses?

No, accounting principles can also be applied to personal finances, nonprofit organizations, and government entities.
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Shumaila Saeed
Dec 24, 2023

What is the relationship between accounting and auditing?

Accounting provides the data that auditors use to perform their examinations and assessments.
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Shumaila Saeed
Dec 24, 2023

Do small businesses require auditing services?

Smaller businesses may not always require external audits, but they still benefit from maintaining proper accounting records for financial management.
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Dec 24, 2023

Can audits uncover fraud?

Yes, audits can detect irregularities, including fraud, by examining financial records and internal controls for anomalies.
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Shumaila Saeed
Dec 24, 2023

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About Author
Shumaila Saeed
Written by
Shumaila Saeed
Shumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.

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