Auditing Notes

Q: “Auditing begins where accounting ends. State points of difference between accounting and auditing?

“Auditing begins where accounting ends”

Accounting is a process of maintaining business records. Joint stock companies are required by law to maintain proper record of business transactions. Maintaining books of accounts and preparing financial statement is a prime responsibility of directors.
The shareholders are ambitious to see that their investment is safe. It is therefore imperative that the accounts must be checked and audited to assure the shareholders that accounts have been properly maintained. Therefore auditing is based on accountancy and not accountancy on auditing.
An accountant drafts balance sheet and profit and loss account while an auditor has no duty to prepare such accounts but to certify that they are correct, properly drawn up and that they reveal true and fair view of the state of affairs of the concern.

Difference Between Accounting And Auditing:

|Accounting |Auditing |
|Meaning: | |
|Accounting is a process of maintaining books of accounts, and |Auditing is a process of examining books of accounts and |
|preparing financial statements for the information of the |financial statement with a view to express an opinion for the |
|management. |information of the shareholders. |
|Objective/ purpose: | |
|Main objective is to measure business performance and financial|To secure an independent opinion about the accuracy of the |
|strength of the company.