Many people use the words accounting and auditing interchangeably, but they’re different. Both professions work with financial statements and regulatory compliance, but their roles are drastically different. Accountants and auditors are intrinsically linked but function uniquely. You can do either with a Bachelor of Arts degree in business administration – accounting and enjoy a role in a growing field with strong prospects for the future. Let’s take a deeper look at accounting and auditing.
What is accounting?
As an accountant, you track and analyze a company’s financial transactions. In a managerial role, you oversee staff that prepares invoices for clients or manages invoices your company pays. You will prepare financial reports including the income statement, balance sheet, and statement of cash flows for the organization. You might also forecast cash flows and deal with regulatory compliance and employment and income taxes.
Some types of accountants include:
- Staff accountant – This is a catch-all term for accounting generalists. At small businesses, he or she handles day-to-day bookkeeping and at larger companies, may perform specific segmented duties.
- Cost accountant – These accountants work within the supply chain to analyze profitability, cost of production, and to assess and recommend cost-saving opportunities.
- Tax accountant – As it sounds, these accountants prepare tax forms, filing, and returns for individual or businesses including income, payroll, and other taxes.
- Forensic accountant – This role is that of an investigator who searches for errors or omissions, researches known errors, theft, or fraud to find the source.
- Management accountant – These accountants work with company leadership to provide updates on financial health and inform decisions made by executives.
- Government accountant – This type of accountant might work for the federal, state, or local government and is a segment of accounting with different norms.
- Project accountant – These accountants may move from company to company for special projects or work within a single company for internal projects.
- Investment accountant – These professionals work for brokerage and investment firms, require special knowledge in currency and investments, and may have specialized certification.
What is auditing?
Auditors verify work done by bookkeepers and accounts. For instance, an accountant prepares financial statements, and an auditor verifies and assures accuracy and completeness and adherence to GAAP (generally accepted accounting principles). They can be internal auditors that the company keeps on hand to function in a role of assuring quality and accuracy of financial reports. Auditors can also be external auditors such as those hired for annual audits for tax or financial statement purposes.
Some types of auditors include:
- Independent auditor: These external auditors certify financial statements, check for accuracy of internal accounting transactions, and assess the company’s financial position.
- Internal auditor: This is an in-house position that assesses the accuracy of transactions, regulatory compliance, evaluate risk management, and test and improve internal controls.
- Forensic auditor: These auditors carefully inspect financial records to discover fraud or errors or to gather evidence for a court case.
- Government auditor: This an auditing role that works under a unique set of standards promulgated by the U.S. Government Accountability Office.
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How do accounting and auditing compare?
Accountants and auditors share many underlying similarities including requirements for:
- A bachelor’s degree in business administration with a major in accounting is desirable.
- Thorough understanding of generally accepted accounting principles (GAAP), which refer to a set of rules that encompass details, complexities and legalities of business and corporate accounting.
- Ensuring company financial records are complete, and accurately reflect its financial position.
- Operating under strict ethical guidelines that are more stringent for auditors.
How do accounting versus auditing job duties differ?
Here are some of the key differences between the two accounting positions:
- Schedule: Accountants accomplish daily financial tasks from invoicing to processing payroll, accounts payable, accounts receivable collections, etc. Auditing functions and tasks are not daily or continuous. Audits are usually conducted periodically, often annually.
- Oversight: Auditors verify the work of accountants and ensure quality, accuracy, and completeness. Accounting managers and supervisors also check the work of other accountants, but more from a quality assurance perspective than compliance.
- Employment: Accountants are employees of an organization while auditors are internal or external. Internal auditors work for the company to verify the work of accounting staff. External auditors are brought in to verify, often to certify financial statements for publicly held firms.
- Special projects: Accountants usually work on day-to-day record-keeping while auditor may be hired for special projects such as forensic accounting to determine the source of fraud or theft of company assets or funds.
- Special certification: Often, auditors are certified public accountants (CPAs). It requires rigorous study, experience, testing, licensing, and continuing education. Most auditors that certify company financial statements are CPAs.
At a baseline, auditors are accountants, but accountants are not auditors unless they branch into that field. Preferably, accountants and auditors both have an accounting degree. After graduation with a BA in accounting, some jump right into auditing without ever working as a standard accountant. Others might start out as an accountant and then migrate into an auditing role.
If you’re heading back to college to complete your degree or get another degree to transition into an accounting or auditing field, consider completing an online bachelor’s of business administration in accounting with St. Ambrose University.