An accountant and auditor belong to the beginning and end of the accounting system. While an accountant is responsible for preparing books of accounts, an auditor’s job role is to verify their accuracy.
What is the Difference Between Auditor and Accountant?
Auditing and accounting are two popular branches of commerce that play a vital role in maintaining the financial records and statements of the company. Based on the different accounting procedures of the company, an auditor or accountant is hired.
While an accountant prepares the accounting statements like a balance sheet for the company, an auditor verifies it for sure. Both roles have their own responsibilities and there are differences between them.
To know more about auditor vs accountant, read on further.
Who Is an Auditor?
An auditor is an individual who is responsible for evaluating and reviewing the accuracy of recorded business transactions and financial reports. They are trained to verify the reliability and validity of the accounting data provided by a company.
Their job is to conduct an audit and then, on the basis of it, prepare a report which determines the clarity and accuracy level that the company accounts for. As auditors ensure compliance with tax laws, they prevent companies from fraud. They point out the different inconsistencies in the processes of accounting and help organisations recommend varied ways for improving their effectiveness.
Who Is an Accountant?
An accountant is a finance professional who deals with the financial aspects of any organisation. They not only handle bookkeeping records but also sort out the financial documents needed for running the business, like balance sheets, profit, and loss statements, etc.
An accountant is also responsible for scrutinising the cash inflow and outflow of a company. They do this through recording business transactions, reporting the company’s performance, and issuing financial statements. They also evaluate the profits and losses of a company, create a budget for the company, prepare and review financial documents that comply with the accounting standards and practices.
In fact, their job responsibilities also include restoring your accounts from different vendor payments, credit card statements, and various other business transactions.
Auditor Vs Accountant- What Is the Difference?
After the financial accounting process is completed for a year, only then the auditing process can start. Let’s differentiate between accounting and auditing here.
An auditor takes a look at the financial statement of the company and evaluates its accuracy.
An accountant prepares the company’s financial statements at the year’s end. Thus, it determines the financial stability of the company.
Relationship with the company
An auditor is mostly hired from an outside firm to verify the accuracy and precision of an accountant’s work. Thus, they have no financial relations with the company.
An accountant is usually an employee of the company for which they work.
Regularity of Work
Auditors need not work daily, and they usually perform accounting work either annually or quarterly.
Accountants need to work on a daily basis to maintain accounts.
Auditors usually need to move around from one company to another to conduct audits.
Accountants work in their own office premises or workspace, as they work for a specific company.
Hiring an auditor is optional for a company.
Hiring an accountant is a basic requirement of a company or business.
An auditor’s work is governed by International Auditing Standards.
An accountant’s work is regulated by International Accounting Standards.
Level of Responsibility
An auditor is far more responsible than an accountant, as the report that they issue certifies the accountant’s work.
Their responsibility is to present a fair view of the company’s financial position to its stakeholders.
Types of Auditors
Depending on where they are employed and what job profile they are in, these are some types of auditors.
- Internal Auditor: An internal auditor usually works for the company they audit. They mainly conduct audits for the financial reports of the business. Also, they assess the effectiveness of the company’s and management’s internal controls over financial reporting. They are not completely independent of the company for which they perform audits. However, they usually don’t report directly to the management.
- External Auditor: They are usually independent of the companies or clients they work for. After conducting audits, they can express their own opinions regarding the financial statement of the company and whether they are free of any misstatements or not. They might also work for the government to examine the records of businesses and individuals for which they have been hired. They verify whether their recorded business transactions or financial statements comply with the various tax laws or not.
- Forensic Auditor: The main job of a forensic auditor is to investigate the company’s financial reports and determine whether any fraud has been committed or not. The outcome or evidence is used for prosecuting the party who has committed the fraud. They can be employed within a company or can also work for an outside firm that conducts an investigation for their clients.
Types of Accountants
For performing different types of accounting responsibilities, there are certain different types of accountants. Here are some types of accountants that work in an accounting firm:
From bill payments to submitting weekly reports, bookkeepers deal with multiple business stuff. Though they are experts in handling various financial responsibilities, they do not possess the license that permits them to prepare your taxes or represent the IRS.
Certified Public Accountant (CPA)
A CPA is liable to represent taxpayers before the IRS for conducting audits. They are allowed to prepare and sign tax returns for various businesses and individuals. But before getting the license as a CPA, they have to pass the mandatory exam and meet a few other requirements as well.
A private accountant is usually hired for working with a single company. They not only perform basic accounting duties but also prepare reports for review by a CPA.
Certified Management Accountant (CMA)
Most of the time, a CMA is hired for a leadership role, and they use financial data for helping the organisation with risk management, business strategies, and budgeting. Their job responsibility also includes managing a team of accountants that performs basic accounting roles.
A cost accountant is hired to analyse the differences in the actual and budgeted numbers and they report the causes responsible for the differences. Their main aim is to identify those areas that require improvements in the organisation and try their best to make them more cost-efficient. In fact, they also provide help in planning, budgeting as well as forecasting functions. Thus, a cost accountant maintains the cost efficiency of the company.
They are accounting professionals who are trained in the taxation field and assist large organisations, individuals, or partners in filing tax returns. They also provide individuals or organisations with some advisory and consulting services in tax-related matters.
They are usually hired by various asset management firms or investment brokerage firms. They are responsible for checking whether the organisation complies with all the regulations of the investment banking industry or not.
A forensic accountant performs an audit for analysing financial records to check for any fraud or errors. Also, they utilise their investigative skills to verify whether the financial records comply with state and federal laws.
These accountants are usually known for investigating white-collar crimes like bankruptcy, security fraud, embezzlement, etc.
Which One Is Better Auditor or Accountant?
From the job profile or responsibility point of view, of course, an auditor is in a much higher position than an accountant. But in terms of stability, thanks to the accounting field, both these jobs have enough demand in the market.
One can even start their career as an accountant and later shift to becoming an auditor. But both these job roles are dynamic in nature. Every firm or organisation needs an accountant but many short firms or individuals handling their business on their own might not require an auditor. So, it is much easier to get an accountant job rather than an auditor. However, the status and the pay scale of the latter are higher.
Though there is some difference between audit and accounting, for a successful organisational setting, both auditor and accountant can work hand-in-hand. The internal controls set by both auditors and accountants together are usually approved by the management.
FAQs About the Differences Between Auditor and Accountant
As per the Companies Act 2013, an accountant or any other individual should be a qualified chartered accountant to become an auditor.
Yes, because an auditor has an agent-principal relationship with the management, whereas an accountant has an employee-employer relationship with the management.
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