A guide to accounting vs auditing (including skills)
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If you're considering a career in accountancy, it's important to understand the difference between accounting and auditing. Auditors are a particular type of accountant whose role is to inspect a company's accounts to verify the work that company accountants do. Auditors require strong accountancy skills, but the responsibilities of accountants can be more varied than those of auditors. In this article, we explore the similarities and differences of accounting vs auditing, including the responsibilities, skills and qualifications that each role requires.
Accounting vs auditing
Before you choose which career path you want to follow, it's important to understand the differences between accounting vs auditing. If you decide to become an accountant, you could choose to specialise in financial reporting, in which case you could work as an accountant for a company or organisation preparing and filing financial reports.
You could also choose to work as an auditor, which is a special type of accountant who inspects the financial reports of companies and checks the work of the accountants that the company has hired. Auditing is a subtype of accountancy, which means that accountants and auditors have many of the same skills and qualifications, but auditors specialise in audit accounting. Other types of accountants who also have specialist knowledge include tax accountants and risk accountants.
What is an accountant?
An accountant is a professional who organises, checks and presents financial data either for a single company or multiple individual clients. There are several different types of accounting work depending on their circumstances and seniority. Junior accountants have less responsibility, and these accountants mainly take on lower-level accounting tasks such as filing documents and cross-checking data. More experienced accountants are responsible for creating financial statements and forecasting financial data. Some of the typical duties of an accountant include:
completing essential accounting tasks such as processing purchase orders and payments, overseeing accounting software and accounting for stock
checking accounting entries to make sure they're correct and ensuring all the necessary documents are correct before filing them away
preparing accounting reports such as balance sheets or profit and loss accounts using financial data and forecasting financial predictions of future profits using past data
managing essential tasks like bookkeeping and payroll, either in-house for a larger organisation or while working for an accountancy firm
What is an auditor?
An auditor is a professional trained in accountancy who inspects the financial data and reporting methodology of accountants to check them for accuracy. Auditors can be internal, external or work for the HM Revenue and Customs (HMRC). External auditors work for financial service companies, who are responsible for auditing both private and public sector organisations to ensure that their financial reports are accurate and correct. As an external auditor, daily tasks and responsibilities might include:
meeting with clients and learning how their business works, observing employees at work and taking steps to understand business processes
verifying accounting entries or figures that accountants compile and ensuring that accountants class assets and capital appropriately
checking accounting data for anomalies, omissions and errors in reporting to ensure a company's accounting processes are accurate and following accounting requirements
auditing the activities of a particular department within an organisation such as finance, accounting or another specific section
visiting client sites to observe the reporting protocols and processes that accounting teams follow
Auditing and accountancy qualifications, skills and working life
If you're considering a career in auditing or accountancy, it's important to understand the similarities and differences between the two career paths and how the qualifications, skills and working environments of each role differs:
Professional auditors and accountants both obtain various certifications to become qualified accountants. Most auditors and accountants have an undergraduate degree, often in maths, accountancy or a relevant subject, though it's also possible to study an unrelated degree before training to become an accountant with an accountancy firm. Accountancy firms offer training on the job, and you can also study and take exams for accountancy qualifications in your spare time.
Lower-level accountancy qualifications include the Association of Accounting Technicians (AAT) qualifications. These can prepare you for lower-level accountancy roles in bookkeeping and payroll. Completing an AAT course also means you're qualified to start your own accountancy practice. To become a chartered accountant, you could study for qualifications offered by the Association of Chartered Certified Accountants (ACCA). Courses that these and similar institutes offer include papers on auditing and compliance, which are essential for accountants wanting to specialise in auditing.
Auditors and accountants share much of the same skill sets. They both require excellent attention to detail to spot errors on financial reports and ensure that all paperwork they file is accurate. They also require strong technical skills and the ability to perform rough calculations quickly. Accountants and auditors regularly use various types of accountancy software and spreadsheets, which requires an openness to working with technology and computers.
If you're a confident, outgoing person with excellent communication skills, you could excel as an auditor. External auditors work with many different clients, which requires getting to know new people, asking questions and sometimes publicly disagreeing with the accountants working at the company you're auditing.
Auditors and accountants work primarily from offices, although you may also visit client sites if you're an external auditor. This may include spending time outdoors, on construction sites or in other hazardous environments. Many aspects of your working life depend on the company you work for. Both auditors and accountants work core hours of 9 a.m. to 5 p.m. with some overtime during busy periods, though auditors may work significant amounts of overtime if unexpected delays occur close to filing deadlines.
The national average salary of an auditor is £31,492 per year. This is lower than the national average salary of an accountant, which is £35,006 per year. Whether you choose to become an accountant or an auditor, your actual salary depends on where you work, plus your experience and the industry you work in.
What are the biggest differences between accounting and auditing?
Accounting and auditing are two very similar careers that use many of the same skills and therefore require similar qualifications. If you're unsure about which career you want to pursue, it's important to consider the primary differences between accounting and auditing before making your choice. Some of these differences include:
One of the key differences between auditors and accountants is their primary function. The function of an accountant is to track the money that flows in and out of a company to help determine its financial health and provide accurate reports for stakeholders. The primary function of an auditor is to ensure that accountants use the correct accounting methods in reports, particularly if they're for investors or creditors, to ascertain whether all relevant information is present.
Because of the difference in the primary function of auditors and accountants, the responsibilities of both roles are different also. Accountants' responsibilities can vary on a daily basis and can include maintaining records, preparing documents, training other staff members and presenting financial forecasts. Auditors spend less time preparing statements and reports and more time examining reports created by accountants, identifying risk areas and recommending improvements to finance departments.
The strict regulations that guide company accounting provide a clear accountability structure for both accountants and auditors. Auditors hold accountants accountable for their work, as it's their job to check the accuracy of financial statements and reports submitted by company accountants. Accounting standards boards and oversight bodies, such as the Financial Reporting Council, hold auditors accountable for their work.
Because an auditor's role is to examine and assess the accuracy of company accountants, external auditors are usually considered more senior than the accountants they work with. This means that external auditors, especially those at the management level, require considerable experience and relevant qualifications to carry the authority they require within a client's organisation.
Despite accounting and auditing being similar professions, a big difference between the two is that accounting requires an understanding of accounting principles, whereas auditing requires knowledge of accounting regulations. This different focus affects their responsibilities and requirements, including education and career experiences, as the two roles require very different knowledge bases.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
Please note that none of the companies mentioned in this article are affiliated with Indeed.
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