Difference between Accounting and Auditing

Difference Between Accounting and Auditing

Accounting is the process of keeping track of, sorting, summarizing, and making sense of a company’s financial events and statements to determine its overall financial state. Often referred to as “the language of business,” accounting involves recording daily transactions and preparing financial statements.

Auditing, on the other hand, is the process of examining an organization’s financial records, such as transactions and accounts, to ensure their accuracy and compliance. Auditing is crucial for verifying that financial records are correct and that accounting practices adhere to standards.

There are two main types of audits: internal and external. Internal audits are conducted by auditors within the organization, while external audits are performed by independent accountants hired from outside the company. Owners and stakeholders typically choose external auditors to review the organization’s books.

Here are some key differences between accounting and auditing:

Difference Between is as follow:

Aspect	Accounting	Auditing
Definition	The process of tracking, sorting, summarizing, and analyzing financial events and statements to assess a company’s financial status.	The process of reviewing financial records to check for accuracy and compliance, ensuring that transactions are correctly recorded.
Reason	To provide insight into the financial position, profitability, and performance of a business.	To verify the correctness of the financial data provided by accounting and ensure a true and fair view of records.
Goal	To determine the organization’s profit, loss, and overall financial state for a specific period.	To confirm that all recorded transactions are accurate and compliant with standards.
How it Works	Performed daily as part of ongoing business operations.	Conducted periodically, such as monthly, quarterly, or annually.
Carried Out By	Accountants are responsible for accounting tasks.	Auditors are responsible for conducting audits.
In Order	Accounting precedes auditing and starts after the books are closed.	Auditing begins after the accounting process is completed.

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