What are the difference between accounting and auditing?

Accounting is used to track the monetary transactions and also used as a tool for reporting business financial statements whereas Auditing is the verification activity. It verifies financial statements. It checks and confirms the authenticity of books prepared by accounting people. Validity and reliability of accounting information is also determined using auditing


It is a business language that helps in understanding the economic activities of business. The main function is to provide information (financial nature) which is helpful for decision making. Tax accounting, social responsibility accounting, financial accounting, HR accounting are fields of accounting. Primary objectives are

  • Keep proper record (journal, ledger, trail balance & subsidiary books)
  • Determine profit or loss (trading and P&L Account)
  • Shows financial position (Balance sheet)
  • Information about solvency & liquidity position is provided


It examines the financial information related to business. The main aim is to give true & fair view of financial information. It is also a critical and unbiased investigation. Different types of audits are

  • Unmodified
  • Modified (further divided into qualified, adverse, disclaimer)

The major differences between accounting and auditing are as follows −

Recording and preparation of financial transactions and financial statements.Inspects financial statements.
The main purpose is to report company financial position.The main purpose is to verify the reliability of financial statements.
It is a continuous process.It is performed in quarterly, half-yearly or annually.
It is a prior step before auditing.It is the next step after accounting.
It is inclusive of accounting standards and rules.It is inclusive of auditing rules and standards.
It is performed by accountants.It is performed by auditors who are professionally certified.
Financial statements are end results.Finial result is an audit report.
Financial, cost, and management accountings are types of accounting.External/statutory audit and internal audit are types of auditing.


Both auditing and accounting are specialized fields. Scope of audit is wider when compared to auditing. Auditing covers understanding Acts, tax rules, good understanding of accounting standards.

Updated on: 18-May-2022


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