Accounting and auditing are business terms that are mistakenly used interchangeably. Although both terms refer to the financial aspect of a company, they mean different things. Accounting is the process through which businesses capture, classify, summarize, and analyze financial transactions to determine the profitability and financial position of an entity. The accounting work is done almost continuously by company employees, but a freelance accountant in Dubai can help businesses manage their financial transactions. The process has several subcategories that include cost accounting, financial accounting, and management accounting, depending on individual companies. An accountant can use one of the most popular web-based accounting tools to make the process friendly and less tiring.
Auditing looks at the financial statements and records of a company. On most occasions, it is a legal requirement to prepare financial statements by a professional. The process involves a thorough inspection of the reports with a view to giving an opinion that is unbiased and fair. The purpose of carrying out audits is to determine whether the financial records and statements provide an honest and accurate reflection of the company’s financial position. The auditors are usually independent experts governed by specific provisions on behalf of regulators or shareholders. The applicable laws dictate the extent of work that an auditor should complete. Auditing can be internal or external. An employee prepares the internal report while the external report is by an independent professional appointed by the shareholders.
Although the purpose of carrying out auditing and accounting are different, both processes have several similarities. They seek to offer a true reflection of the company’s financial position. Both accounting and auditing require the use of specific techniques and procedures of computation, analysis, and bookkeeping. You need a deep understanding of accounting basics and principles to become an auditor or accountant. Even though an accounting degree is necessary, you definitely need a professional accountancy qualification to become an accountant. However, if you are looking to understand accounting and auditing better, you must look at their differences, discussed below.
Accounting vs Auditing – The 11 Key Differences That Set Them Apart
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Topic |
Accounting |
Auditing |
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1. Definition |
It is the process of keeping monetary records and preparing financial statements with the aim to give the correct financial status of the company. |
Review and preparation of financial statements o ensure the figures in the financial statements are true and reliable. |
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2. Supervisory Body |
The International Accounting Boards issue the standards accountants must adhere to when preparing financial records. |
International Auditing Boards give out the standards that auditors must follow when auditing financial records. |
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3. Purpose |
To analyze records with the intention to give the correct financial outlook of the company. |
To review and verify financial statements with the purpose to find whether they are giving the true and fair status of the company. |
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4. Main Categories |
Several categories exist, but the main areas include financial accounting, cost accounting, managerial accounting, government accounting, and human resource accounting. |
It can be broken into two, internal and external auditing. Internal auditing seeks to help managers get the right financial situation of the company for precautionary and improvement purposes. External auditing is a statutory requirement. |
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5. Deliverables |
The financial statement is the outcome and it can include a balance sheet, cash flow statement, and profit, and loss statement. |
The audit report is the outcome. It can be qualified, unqualified, or unable to provide a report. The qualified report highlights exceptions in the financial statements. Unqualified states the financial statements are true. Unable to give a report is when there is not enough data. |
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6. The person who does the job |
Accountants and bookkeepers |
Auditors |
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7. Skills necessary |
The job requires diverse skills, but you must have an understanding of accounting standards, know about different revenue models, interpret financial statements, and ability to take timely, measured decisions. |
An auditor should have an understanding of both auditing and accounting standards, the accounting standards of the organizations, demonstrate analytical skills, and be able to interpret financial statements. |
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8. Timing |
It is a continuous process that includes the daily recording of all financial transactions. It is usually the next step after bookkeeping and focuses on the current financial transactions. |
It is a periodic process that happens after the reconciliation of the final accounts and statements. It usually occurs annually and concentrates on past financial statements. |
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9. How it is done |
The process involves checking and verifying all financial reports and statements and accurately recording and presenting all statements as per the set standards. |
The process involves sample and test checking with the aim of verifying the accuracy and reliability of statements. |
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10. Appointment |
The management team appoints the accountant. |
An auditor is usually an external party appointed by shareholders or a regulator. |
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11. Remuneration |
An accountant receives a fixed salary set out by the management. |
An auditor gets a fee that is set out by shareholders. |
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Accounting & Auditing standards are regularly Updated. Here are the Best Accounting Courses in Dubai which will keep your team up to date with the recent developments. In order to get a clean audit report, it is essential that your financial reports meet the latest requirements.
We understand hiring a professional accountant can be expensive. Here are the 5 Crucial Reasons why you need a Professional Accountant in the UAE.
Where hiring a professional accountant is a must. Companies can cut their cost by hiring a freelance accountant. Here is why Small Home Business Owners Must Hire A Freelance Accountant in Dubai. Hiring a freelance Accountant also helps you when you are downsizing for better financial management.
Availability can be an issue if you hire freelance accountants in another country. If you hire an accountant in the same location, you can monitor the accountant and log the work using various tools. Here are the 5 Best Tools To Monitor Freelancers When Paying by the Hour.
Conclusion
Although the accountants are usually internal employees, businesses can benefit by hiring the best freelance accountants to assist in the preparation of financial accounts. If your company has a limited budget or a few transactions, hiring a freelance accountant in Dubai can help reduce operating costs as you will only pay for the work done as opposed to a salary.