Audit and Assurance

What is the Difference between an Auditor and an Accountant?

March 13, 2019 Comments Off on What is the Difference between an Auditor and an Accountant?

The professions of an Accountant and an Auditor are very similar to each other, and the terms are often used in place of one another. Both the accountant and the auditor require the basic knowledge of accounting and bookkeeping and need analytical and computational skills. This causes people to confuse between the two and use these terms instead of each other, which is a wrong practice. Let’s go ahead and find out the differences between the two professions.

Who is an Accountant?

An Accountant is a professional who takes care of the daily financial transactions of the company or the business. He deals with the company raw data, analyse them and then create the various financial statements for the company. He is usually the employee of the company for which they work, and they work daily. Maintaining a record of the transactions will help in filing for Value Added Tax in the future.

Now let’s see who an Auditor is.

Who is an Auditor?

An auditor is a person or a firm, usually a third party, which is appointed to check all the books of the company to check for any inconsistency. An auditor will analyse the books which have been created by an accountant and will check everything for any variations and then generate an audit report by his scrutiny. Even a small variation in the books would mean that the accountant was not vigilant and was not properly keeping the books.

The Differences between an Accountant and an Auditor

In the world of Accounting, the term Accountant and Auditor hold different responsibilities. For better clarity, read below.

Accountant

Auditor
  • An Accountant is a person who has the responsibility of recording, classifying, summarising and analysing the various business transactions of the business.
  • Auditors are the people who examine all the financial books created by the accountant and figure out the viability and the accuracy of the financial books.
  • The objective of the accountant is to search and record all financial data and paint a complete financial picture of the business. This would include figuring out the financial position of the company, its profitability, etc.
  • The objective of an auditor is to establish and add to the credibility of the financial reports of the company. This includes the rechecking of the financial statements prepared by the accountant.
  • Accountants of a company have to work daily. They are required to analyse all the data daily which would help them to make the financial books.
  • Auditors perform an audit of a company periodically after any specified case such as suspected fraud.
  • The accountants need to adhere to the Accounting Standards which are issued by the International Accounting Boards and Generally Accepted Accounting Principles.
  • The International Auditing Boards regulates the work of the auditors.
  • Hiring an accountant is a necessary service and a requirement for the business. Every business needs a good accountant.
  • The hiring of an auditor can be optional. If the accountant does next to no mistakes, there will not be any need of an auditor.
  • An accountant creates all the financial books of the company at the end of the quarter. These books are required to understand the financial health of the business.
  • The auditor will conduct scrutiny of every minute detail of the financial books created by the accountant. This Examination of the books will help in the accuracy of the books produced.
  • Since the company hires the Accountants, they have their separate department and fixed working space in the company.
  • As soon as the audit of the financial books is concluded, auditors move on to the next company.
  • Bookkeeping acts as the initiating point of accounting as recording and maintaining the financial transactions of the company will be utilized in preparing the financial statements of the organization.
  •  Auditors can only start their work if the work of the accountants is over. After they prepare the financial statements, the auditors re-check them for any discrepancies.

Let’s find the key differences between auditors & accountants on various factors:

Education

In terms of education, there is not much difference between accountants and auditors.

Their educational requirements are almost similar. Both occupations require that they complete a bachelor’s degree in accounting. You may get a good chance to get hired if you have a master’s degree, like, for example, master’s in business administration with specialisation in Accounting or a Master of Science in Accounting. Most employers prefer their accountants and auditors to have master’s degrees.

 

Graduates of a master’s program may have the following certifications:  Certified Public Accountant, Certified Management Accountant, or Certified Internal Auditor.

While it is important to understand what makes an accountant different from an auditor, once they have their master’s or once they’re certified, these professionals can work in both the Accounting and Audit Departments at different periods in their careers.

Skills

Auditor’s Skills:

  • Meticulous attention to details
  • Excellent problem-solving skills
  • Ability to work under pressure, deadlines
  • Strong IT skills
  • Strong aptitude for Math’s
  • Keen interest in the financial system
  • Ability to work as a team member

Accountant’s Skills:

  • Knowledge of accounting practices
  • Ability to prepare Financial Statements
  • Ability to analyses data
  • Accounting organizational skills
  • Communication skills, written and verbal
  • Proficiency in Accounting software
  • Knowledge of general business practices
  • Critical thinking skills
  • Time management skills
  • Continual learning

Career:

Auditors can work as:

  • Internal Auditor – work within an organisation. They are tasked with auditing the company’s financial records to find any misaligned or mismanaged funds. They also are hoping to find signs of fraud. Internal auditors also assess the company processes to reduce waste to the least possible degree and maximise the use of financial resources.
  • External Auditor – work with a financial reporting firm. When a client contracts their services, External auditors work to perform audits of a company’s finances.
  • IT Auditor – Their work is related to a company’s computer systems to determine whether the digital accounts of the finances of a company are accurately calculated and reported.

Accountants can work as:

  • Public accountants – work with different clients; they prepare financial reports (FS), tax documents, and other accounting statements. They review the company’s financial records, ensuring that those who recorded them follow the accounting policies and procedures.
  • Management accountants – work mainly with larger corporations, where they are tasked with preparing financial reports for internal use. Management accountants also provide analysis of the methods used in accounting and may recommend changes for systems improvement.
  • Government accountants – as their title denotes, they oversee the proper use of government funds across government agencies or businesses that need to be supervised closely concerning the spending of federal funds.
  • Forensic accountants are called upon to investigate suspected frauds. Once fraud is found, they work with company management to improve internal controls so that the incident will not happen again.

Which One to Choose?

In general, an accountant works in the preparation of financial statements, and accounting reports; they sometimes offer advice or make recommendations to the management.

Au auditor reviews the financial records to establish that there are no discrepancies and that the records were done most appropriately.

So, you choose according to your needs. If you need someone to prepare your financial statements, hire an accountant.

If you need a review of your financial records, hire an auditor.

Conclusion

Auditing, as well as Accounting, are specialised fields; they both need to have comprehensive accounting knowledge. Knowledge of relevant accounting/auditing standards and excellent communication skills.