Those who are accountable with the terms audio and accounts are well-informed about the different aspects of these terms. But those who are less aware of what audit and accounts certainly are, may not know the difference between them. To infer the discrepancy between these two it’s noteworthy to have a clear insight into these two factors, audit and accounting.
Derived from the Latin word ‘Audire’, which literally means ‘to hear’, the world audit suggests detailed statements and records of financial earnings and expenses. The audit is a special branch of the entire accounting system of any business organisation. The main purpose of an Top accounting consultants in dubai none other than uplifting the business prospect of any company whether small or large by keeping all the financial records safe and intact.
Many of us have a common question in our mind; the audit process belongs to which category? Finance or accounting? To know the answer of this question, let’s quickly discuss some topics related to the audit process like the accounting process, audit process and finance.
What Is Accounting Process
Accounting and auditing are two very significant terms related to the economical functions of any well-established business organisation. The accounting process of any business corporation refers to the entire scheme of handling all the financial matters of the agency. The accounting procedure includes the following steps which are obligatory for a fruitful business prospect.
- The main phases of an accounting system contain the process of capturing, classifying, briefing, examining and exemplifying the financial statements, reports, profits, and all the transactions of a business organisation.
- All these monetary actions of a business organisation decide its economical position. In simple words, the accounting process is the specialised language of commerce.
The accounting process of any business organisation is usually done by its own trained accountants or other employees. The accounting process is an ever-continual procedure and is dived into several different branches like cost accounting, financial accounting and management accounting.
What Is Auditing Process
The auditing process is a small part of the entire accounting process that is none other than a critical assessment of the economical records or statements of any business organisation. There are specific legal protocols for every country about maintaining a company’s monetary records generous.
Therefore, the auditing method is very much substantial for making the business prospect enhanced and larger of any well-established or potential business organisation. The auditing process can be three different types, internal audit, external audit and government audit.
- An internal audit is a special audit process supervised by a well-trained auditor or an accountant who is an internal employee of a company. The primary purpose of an internal audit is to ensure the development of your business by faultlessly documenting all the financial proclamations of a company.
- The external audit is a practical auditing process generally performed by an expert audit company. The main disparity between internal audits and external audits is that external audits.
Finance is another major term related to the financial actions of any business organisation or an individual. This is a comprehensive term that refers to the actions connected with banking, leverage or debt, capitals, credits, cash, and shares.
This conveys the efficient management of money and the method of obtaining desired funds. Finance also contains the surveillance, production, and survey of wealth, assets, and drawbacks that develop economic systems. In one sentence, finance includes everything related to economical matters.
In Which Category Audit Belongs To?
Now, you may have a clear conception of all the three major procedures related to any financial matter of either an individual or a business organisation. Now, the question remains the same; to which category the audit process belongs. As we stated earlier, the audit process is a specialised or critical part of the entire accounting system.
Finance is something that is an extremely broad subject that includes every aspect of economical activities. Accounting is just a small portion of the entire finance system and auditing is a critical assessment of the entire accounting system.
The Resemblances Between The Auditing And The Accounting
Since the auditing process is a special integral part of the accounting system, both have major resemblances. Most of the fundamental techniques of both accounting and auditing are identical. Both require a comprehensive insight into basic accounting rules.
Both are normally performed by experts with an accounting degree or an efficient accounting and vat consultancy Dubai. The necessary strategies of book-keeping, calculation and research. Accounting and auditing intend to ensure that the monetary declarations. Documents give a satisfactory consideration of the real economical position of a business organization.
The Differences Between The Auditing And The Accounting
Just like the miscellaneous similarities, there are some major differences between the auditing and accounting processes which are based on several factors.
- Accounting is mainly maintaining reports of the financial transactions and readying financial announcements. But auditing is critical analysis of the monetary declarations to provide a viewpoint on their loyalty.
- Accounting is achieved on consecutive basis with daily reporting of monetary transactions; while auditing is basically an occasional procedure and achieved after the creation of final accounts and monetary announcements, usually on yearly or quarterly basis.
- The fundamental priority of accounting is to flawlessly report and present all monetary transactions and statements; while the major emphasis of auditing is to substantiate the precision and trustworthiness of the financial statements. And to assess whether the financial announcements give a true image of the actual financial standpoint.
- Accounting is very comprehensive and apprehends all factors related to financial trades, histories and declarations; while auditing generally utilizes financial testimonies and documents on a sample basis.
- Accounting encloses all trades, records and announcements having financial significance; while auditing mainly insulates final financial assertions and reports.
Therefore, now you surely get a precise idea about which category audit does belong to. If you require any accounting consultancy in Dubai do share with us your requirements.