Difference between Auditing and Accounting
The terms, bookkeeping, accounting and auditing are not similar in meaning and are used to show different purposes. Business organizations need to put these finance related concepts in practice while preparing timely accounts or audit. SBS Consulting is an audit firm in Singapore which is reputed to provide quality service its client.
Bookkeeping is the recording of financial transactions performed by an organization. This record is used to prepare financial statements.
Accounting is a vast field and it covers specialized fields like, financial accounting, management accounting, tax accounting, and auditing. In practice, a prestigious accounting and audit firm in Singapore like SBS Consulting helps their clients in fulfilling legal filings and obligations.
General definition of accounting or accountancy is that it measures, processes and communicates financial data of an organization. Results about organizations economic activities are communicated to investors, regulators, management and creditors of the company. Accountants practice accounting.
- Financial Accounting – In this discipline, an organization’s financial data, including financial statements, is processed and result is submitted to suppliers, investors and regulators.
- Management Accounting – In this discipline, information is measured, evaluated for the use of company management.
- Tax Accounting – In this discipline, the goal of initiating accounting process is tax oriented.
- Auditing – Let us have a better look at auditing which is, as we have seen, a specialized field of accounting.
Auditing is examination of an organization’s data, records, statements, various types of operations and performances for a stated goal. Auditing is done periodically, to check on the health of the organization. Auditors, who are experienced accountants, conduct auditing and verify financial statements.
The purpose of auditing an organization by a professional like SBS Consulting is to determine, how thoroughly it is adhering to GAAP in reporting different activities undertaken by it. (GAAP is Generally Accepted Accounting Principles)
Types of Audits
- Internal Audit – During internal audit, all activities related to an organization’s operations are examined, monitored and analyzed. The process covers financial statements, information system, employee behavior and mainly, business structure. Company auditor performs this type of audit.
- External Audit – An outsider most probably public auditor conducts this type of audit.