Accounting and auditing are important terms that are often used within financial environments. Likewise, accountants and auditors are two sets of professionals that work together to make sure financial activities are carried out systematically in accordance with best practice. However, each profession entails slightly different objectives and end goals.
Primarily, accounting involves revenue and expenditure tracking, profit and loss forecasts, tax preparation, bookkeeping, and other similar financial activities. On the other hand, auditing is a financial activity that aims to control the process of accounting through investigation, analysis, and recommendation for better management of financial resources and activities. Therefore, auditing is a branch of finance that tries to keep accounting in line using regulations.
Defining Accounting
Accounting is a branch of finance that mostly deals with numbers and mathematics that allow for the manipulation of numbers. Most people that decide to become accountants are usually good with numbers. Also, such people mostly find the analysis of numbers interesting. Therefore, the main function of an accountant within a business or an organization is to analyze financial records and generate financial reports that provide a clear picture of the financial status or direction of an entity. Within an institution, accountants operate out of the finance department. In most cases, the people employed within such a department or unit are mostly accountants or people with similar backgrounds.
In addition, accountants are responsible for the management of finances and taxes within an organization. Also, some accountants operate as separate agencies that provide accounting services to both individuals and organizations as consultants. Regardless of the type of relationship an accountant may have with an organization or an individual, they mostly are concerned with exact financial details, taxes, and financial management. They are mostly there to tell an individual or a business what they can and cannot do with money.
For an individual to become a certified accountant that is capable of performing specific financial obligations, they must possess some minimum certification. An accountant must possess a degree in accounting or a related field to stand a chance of being employed as one. For an individual to move up the corporate ladder or run their personal accounting firm, they must possess some certifications. The most important certification in the world of accounting is the Certified Public Accountant certification. This certification is given to a person once they are able to fulfill the requirements set out by a regulator.
Defining Auditing
Auditing is a branch within finance that ensures every accounting decision or activity complies with the regulation. Therefore, an auditor verifies the work accountants do. They go through each financial activity or statement to ensure figures match at all levels. As such, before a financial statement is released to the public, an auditor must go through it to ensure that financial figures match throughout the document.
Most auditors are people that studied accounting during their undergraduate degree. Nonetheless, people with experience in insurance and finance, in general, are capable of becoming auditors.
Additionally, an auditor can work within an organization as an internal auditor. In such a role, an auditor ensures that the accounting department of an organization is doing the right thing financially. Likewise, an auditor can work from the outside as a consultant or an agency. These types of auditing companies provide auditing services to entities that require it.
Comparison Between Accounting and Auditing
In general, accountants and auditors have the same background in accounting or similar financial education. Nonetheless, as each expert grows, each follows a different path in terms of what they need to know and do. Therefore, an accountant must be meticulous with numbers. Likewise, an auditor must be an excellent researcher that is able to differentiate between mistakes and financial fraud.
Educational Background
It is safe to assume that most businesses or accounting firms only employ individuals with a degree as the minimum requirement at the point of entry. In most cases, degrees relating to accounting and finance are mostly accepted. But there are times when an individual with a background in an unrelated field can be employed as an accountant or an auditor if they are good at what they do. In some cases, a person without a degree can become either if they are exceptional at what they do.
Accountants and auditors alike are required to become Certified Public Accountants as they move further into their careers. The minimum requirement for this certification is for an individual to obtain an education level that is up to 150 hours. These hours of education sit between having a bachelor’s degree and a master’s degree. Some of the biggest audit companies in the world only recruit individuals (as accountants or auditors) at the entry-level only if they have this certification.
Expertise
A person that works as an auditor or an accountant must be comfortable working with numbers. Each professional must be able to conduct quantitative analysis of different types using mathematical tools and models. However, a deep understanding of the theory of mathematics is not required. Likewise, both accountants and auditors must have some important management skills as they will eventually become managers. In addition, they must have interpersonal skills that allow them to work as a team.
Earnings
In most cases, auditors and accountants earn nearly the same amount of money. The difference in earnings is determined by experience, education, expertise, and the type of employer. A company like PricewaterhouseCoopers (PwC) is able to pay both accountants’ and auditors’ salaries between $30k to $90k at the entry point. However, smaller accounting companies are not able to offer the same amount of pay. Nevertheless, the amount paid to the individual ultimately depends on what they bring to the table. In addition, people that are able to negotiate their pay may earn a lot more at the entry point.
Future Prospect
Accountants and auditors have a similar prospect for the future within their respective careers. In the long run, it is not foreseeable that businesses will operate without auditors or accountants. The best part is, an excellent accountant can work as an auditor and vice versa.
