DIFFERENCE BETWEEN ACCOUNTING AND AUDITING

DIFFERENCE BETWEEN ACCOUNTING AND AUDITING

Originally the work of professional accountants was largely to the checking .of the arithmetical accuracy of the detailed records in books of accounts, the agreement of the trial balance and the preparation of accounts in fact to what may be described as "accountancy work". But nowadays very large part of a professional accountants work is that of auditing. The difference between accountancy and auditing is not clearly understood by many businessmen, it being thought that if accounts are prepared by a professional accountant, are necessarily guarantees their accuracy. This however, is far from being the case. In preparation of trial balance, profit and loss and balance sheet, the person is acting as expert accountant, and not in any ways "s an auditor. He would not report that the position of the balance sheet v/as true and fair one all that he could say would be that the balance sheet was in accordance with the books.

An audit is quite distinct and apart from accountancy an audit does not entail the preparation of the account at all, but denotes something much wider namely, the examination of balance sheet and profit and loss account prepared by others. As a result of his examination ff the books, accounts and vouchers, etc and his inquiry the auditor must satisfy himself that such balance sheet and profit and loss account are properly drawn as to exhibits a true and fair view of the state of affairs and of earnings of the particular concerns. The difference between accounting and auditing was important factors in the cases of Apfel V. Annan Dexter and Company (1926) and Leach V. Stokes and others. (1936).

Note that if an auditor is carrying on an accounting task he would charge a separate fee for that as it is possible that he may be carrying both assignment simultaneously.