Audit vs Assurance
Auditing and assurance are processes that go hand in hand, and are usually used when evaluating a company’s financial records. Auditing and assurance are parts of the same process of verifying the information on the company’s accounting records for accuracy and compliance with the accounting standards and principles. Despite these similarities, there are a few differences between the two. The article the follows offers a clear explanation on both auditing and assurance and shows how they are similar and different to one another.
Audit
Auditing is the process of evaluating the accounting information presented in the financial statements of the organisation. Auditing includes making sure that the financial reports are accurate, fairly presented, ethically prepared and whether the reports are in compliance with the accepted accounting principles and standards. Auditing also applies to the financial records of individuals and is usually used for taxation purposes. Auditing reveals any misuse of funds, any dishonest business activities, misrepresentation in financial statements, embezzlement, etc. There are internal audits and independent audits.
Internal audits are conducted by the accountants within the organization. Internal audits can be conducted frequently to make sure that the financial records are in compliance with standards. The auditing function can also be outsourced by the organisation to an individual entity specialised in this type of evaluation so that the firm may obtain an unbiased view of its financial statements. The auditing firm usually undertakes the audit before the financial statements are presented to the general public and ensure that the data provides a true and fair representation of the firm’s financial status.
Assurance
Assurance is the process of analysing and assessing processes, operations, procedures, etc. Assurance is also used in the assessment of accounting information and financial records. In accounting, the main purpose of assurance is to check the accuracy of the accounting information and records and provide an assurance to all stakeholders that there are no red flags, misrepresentations or irregularities in the financial reports. The aim of assurance is not to correct any issues that maybe found in the accounting records, but rather to confirm that the accounting records are in compliance with the various accounting standards and principles.
Assurance can also apply to other aspects such as to assess the procedures and processes followed in operations. In such a situation, the processes and systems will be closely observed, and an assurance will be provided as to whether the process is being conducted in a manner that brings out the optimum results.
What is the difference between Audit and Assurance?
Auditing and assurance are procedures that go hand in hand, and usually used when evaluating and assessing a company’s accounting information and financial records. Auditing and assurance are quite similar to each other in that they are both methods used to verify that the company’s accounting records are in compliance with the various accounting standards, principles and, procedures. Assurance is the step that follows and audit. While an audit can be conducted internally by company accounts or externally by individual corporations, assurance is usually done by a professional auditing body or audit board.
Assurances usually follow an audit, because it is after the audit that the assurance will be provided that there are no misrepresentations or red flags in the accounting records. Such an assurance is essential to stakeholders of the firm as this guarantees that true and fair information is provided for decision making.
Summary:
Audit vs Assurance
• Auditing and assurance are processes that go hand in hand, and are usually used when evaluating a company’s financial records.
• Auditing includes making sure that the financial reports are accurate, fairly presented, ethically prepared, and whether the reports are in compliance with the accepted accounting principles and standards.
• In accounting, the main purpose of assurance is to check the accuracy of the accounting information and records and provide an assurance to all stakeholders that there are no red flags, misrepresentations or irregularities in the financial reports.