What do you call an accountant with an opinion? An auditor! I honestly have no idea if that joke is funny within the auditing world, but it seemed to be the most fun accounting/auditing joke on the first page of Google. Jokes aside, there are differences between the two professions even though they are closely related to one another. Knowing these differences can save you a lot of time when hiring for roles, but realistically, if you’re looking for one or the other, you have the general gist of what the differences are. This is more for those people who have no idea but want all the main points written as headlines and without the need to read more than one or two sentences per paragraph. So cheers to you!
Defining Both Accounting And Auditing Jobs
Accountants do accounting, which is basically managing and reporting all monetary records of a company or organization. Auditors perform audits, which essentially means double-checking that the records kept by accountants are being done so in a lawful and correct manner.
Accountants
Getting into a more in-depth understanding of accounting means breaking down what goes on behind the scenes. In its simplest complete form, accounting is the continuous recording, organizing, analyzing, and finally the presenting of financial information of a company. To clear it up, financial information involves:
- Transactions
- Records
- Statements
- Profitability
- Financial Position
Also for accounting, there is another level of the job, certified public accountants or CPAs for short. These specialized accountants require more schooling and they need to pass a board exam. In addition, part of their job explains the difference between an accountant and an auditor, the fact that they are able to represent a client during an IRS audit.
Auditors
Auditors have the authorization to review and verify the accuracy of financial records and ensure that companies comply with tax laws. It is important to note that audits can only start after the accounting for the year is done. Think of this as step 2, while accounting is step 1.
They are able to detect fraud and discrepancies, and in some cases help boost operational efficiency in companies. In layman’s terms, they help businesses get the most out of their money, and in some cases, the most out of their processes.
There are three types of audits:
- Financial
- Compliance
- Operational
Finance is the general audit that you think of, a review of your financial data or money records, to make sure everything is above board. Compliance focuses on policies, processes, and procedures, making sure that they are in line with the law. Operational audits focus on the effectiveness of a company’s internal controls and risk management. This means reviewing rules and possible threats to a company’s capital, think about non-financial and non-law-based influences on the company’s money and that’s what operational audits focus on.
The Wrap Up
If you think of accounting and auditing as steps in a sequence, accounting would come first as the reports generated from it are the documents that auditors would use to do their job. The two professions serve different purposes, as accounting is the continuous process of recording financial statements while auditing happens after the yearly accounting is finished and submitted. If you’re in the market for either of the two positions in a remote environment, make sure to reach out to a trusted BPO partner, and they’ll work with you to narrow down exactly what kind of staff you need and how much it would cost you.