Auditing and assurances are two sides of the same coin. They go hand in hand together and are utilized to evaluate a company’s financial record. Auditing implies evaluating the accounting information presented in the company’s financial statements. The process includes ensuring that the financial reports are error-free, well presented, ethically prepared, and comply with the accepted accounting standards. Auditing is also applicable to the financial records of individuals and is co-opted for taxation purposes. It is essential to highlight that auditing reveals any misuse of funds, embezzlement, dishonest business practices, misrepresentation in financial statements, and so forth.
Likewise, assurance is the process of examining and assessing processes, operations, and procedures. It involves checking the accuracy of accounting information and providing assurance to stakeholders that there are no red flags, irregularities, misrepresentation, and so on in the reports. Now that we have briefly discussed audit and assurance, let us look at their differences.
Difference between Audit and Assurance – A Crisp Overview
1. An audit is a process of closely investigating and examining the accounting information presented in an organization’s financial records. On the contrary, assurance is a matrix of strategies for analyzing and assessing the processes, procedures, operations, etc.
2. The second difference between audit and assurance is that the audit aims to present financial information and reports fairly, ethically without bias, as per set accounting principles. On the other hand, assurance involves evaluating the accuracy of the financial records and making all stakeholders aware of any red flags, dishonesty, malpractice, and the like.
3. The international accounting standards extend an auditor with more rights to access any information related to accounting. Thus, they become more liable for any malpractice. On the contrary, an assurance auditor has fewer rights than an audit because of the former’s limitation to a particular region.
4. An audit is accountable to all the major stakeholders who have invested in the organization and includes keeping track of all the individuals. Assurance is primarily responsible towards a specific type of stakeholder, such as management.
5. An audit requires more resources as it involves dealing with the stakeholders, whereas assurance requires limited resources to deal with stakeholders.
6. When it comes to the last difference between audit and assurance, the former’s accounting information has more accuracy and reliability because of the assistance of the internal control audit and third parties. Contrarily, assurance is the step that continues after the audit is professionally done by an auditing board or council.