Accounting vs. Auditing: What’s the Key Difference? All You Need to Know

Auditing and accounting are two of the major aspects of an organization that are related to the financial activities of a business. These terms are sometimes used interchangeably; however, they are completely different from one another as they deal with business tax preparation in Midtown Tulsa, OK. On the one hand, where accounting is a much wider field, auditing is an integral part of accounting. As a business owner, if you want to know the difference between accounting and auditing, we have got you covered. This article has jotted down the difference between accounting and auditing. Let’s dive in! 

What is Accounting?  

Accounting can be described as a process of classifying, recording, interpreting, and summarizing financial statements and transactions, which helps identify your business’s financial position. It is also referred to as the business’s specialized language. The primary objective of accounting is to identify the profit and loss of a business in a specified period. Generally, accounting is performed by business owners or accountants in a business. 

What is Auditing? 

Auditing refers to closely examining all financial information and records, like an organization’s statements and transactions, to identify any discrepancies within the recording process. Additionally, it verifies all records for maximum accuracy. Generally, there are two types of audits, including internal and external audits. The internal audits are organized by an in-house auditor, whereas external audits are handled by auditors from the outside world. 

Difference Between Accounting And Auditing 

Here is a quick difference between accounting and auditing: 

Particulars  Accounting  Auditing 
Definition  Accounting means managing a company’s accounts and preparing financial statements to examine a company’s financial position.  Auditing is described as closely examining or inspecting accounting books and financial statements of a company. 
Objective  The main objective or purpose is to determine the financial position of an organization.  The main objective is to verify the data accuracy and check the correctness of all recorded transactions before the financial year ends. 
Governed by  Accounting is governed by accounting standards Auditing is governed by standards on auditing
Period  Accounting is done on an everyday basis  When accounting ends, auditing starts. 
Performed by  Accounting is performed by an accountant Auditing is performed by an auditor 

Wrapping Up 

Both accounting and auditing are vital aspects of your organization; however, they are different. This article highlights the difference between the two. 

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