What is the Difference Between Auditor and Accountant?

Auditing and accounting are two popular branches of commerce that play a vital role in maintaining the financial records and statements of the company. Based on the different accounting procedures of the company, an auditor or accountant is hired.

While an accountant prepares the accounting statements like a balance sheet for the company, an auditor verifies it for sure. Both roles have their own responsibilities and there are differences between them.

To know more about auditor vs accountant, read on further.

An auditor is an individual who is responsible for evaluating and reviewing the accuracy of recorded business transactions and financial reports. They are trained to verify the reliability and validity of the accounting data provided by a company.

Their job is to conduct an audit and then, on the basis of it, prepare a report which determines the clarity and accuracy level that the company accounts for. As auditors ensure compliance with tax laws, they prevent companies from fraud. They point out the different inconsistencies in the processes of accounting and help organisations recommend varied ways for improving their effectiveness.

An accountant is a finance professional who deals with the financial aspects of any organisation. They not only handle bookkeeping records but also sort out the financial documents needed for running the business, like balance sheets, profit, and loss statements, etc.

An accountant is also responsible for scrutinising the cash inflow and outflow of a company. They do this through recording business transactions, reporting the company’s performance, and issuing financial statements. They also evaluate the profits and losses of a company, create a budget for the company, prepare and review financial documents that comply with the accounting standards and practices.

In fact, their job responsibilities also include restoring your accounts from different vendor payments, credit card statements, and various other business transactions.

Depending on where they are employed and what job profile they are in, these are some types of auditors.

• Internal Auditor: An internal auditor usually works for the company they audit. They mainly conduct audits for the financial reports of the business. Also, they assess the effectiveness of the company’s and management’s internal controls over financial reporting. They are not completely independent of the company for which they perform audits. However, they usually don’t report directly to the management.
• External Auditor: They are usually independent of the companies or clients they work for. After conducting audits, they can express their own opinions regarding the financial statement of the company and whether they are free of any misstatements or not. They might also work for the government to examine the records of businesses and individuals for which they have been hired. They verify whether their recorded business transactions or financial statements comply with the various tax laws or not.
• Forensic Auditor: The main job of a forensic auditor is to investigate the company’s financial reports and determine whether any fraud has been committed or not. The outcome or evidence is used for prosecuting the party who has committed the fraud. They can be employed within a company or can also work for an outside firm that conducts an investigation for their clients.

For performing different types of accounting responsibilities, there are certain different types of accountants. Here are some types of accountants that work in an accounting firm:

• Bookkeeper

From bill payments to submitting weekly reports, bookkeepers deal with multiple business stuff. Though they are experts in handling various financial responsibilities, they do not possess the license that permits them to prepare your taxes or represent the IRS.

• Certified Public Accountant (CPA)

A CPA is liable to represent taxpayers before the IRS for conducting audits. They are allowed to prepare and sign tax returns for various businesses and individuals. But before getting the license as a CPA, they have to pass the mandatory exam and meet a few other requirements as well.

• Private Accountant

A private accountant is usually hired for working with a single company. They not only perform basic accounting duties but also prepare reports for review by a CPA.

• Certified Management Accountant (CMA)

 Most of the time, a CMA is hired for a leadership role, and they use financial data for helping the organisation with risk management, business strategies, and budgeting. Their job responsibility also includes managing a team of accountants that performs basic accounting roles.

• Cost Accountant

A cost accountant is hired to analyse the differences in the actual and budgeted numbers and they report the causes responsible for the differences. Their main aim is to identify those areas that require improvements in the organisation and try their best to make them more cost-efficient. In fact, they also provide help in planning, budgeting as well as forecasting functions. Thus, a cost accountant maintains the cost efficiency of the company.

• Tax Professional

They are accounting professionals who are trained in the taxation field and assist large organisations, individuals, or partners in filing tax returns. They also provide individuals or organisations with some advisory and consulting services in tax-related matters.

• Investment Accountants

They are usually hired by various asset management firms or investment brokerage firms. They are responsible for checking whether the organisation complies with all the regulations of the investment banking industry or not.

• Forensic Accountants

A forensic accountant performs an audit for analysing financial records to check for any fraud or errors. Also, they utilise their investigative skills to verify whether the financial records comply with state and federal laws.

These accountants are usually known for investigating white-collar crimes like bankruptcy, security fraud, embezzlement, etc.

From the job profile or responsibility point of view, of course, an auditor is in a much higher position than an accountant. But in terms of stability, thanks to the accounting field, both these jobs have enough demand in the market.

One can even start their career as an accountant and later shift to becoming an auditor. But both these job roles are dynamic in nature. Every firm or organisation needs an accountant but many short firms or individuals handling their business on their own might not require an auditor. So, it is much easier to get an accountant job rather than an auditor. However, the status and the pay scale of the latter are higher.

Though there is some difference between audit and accounting, for a successful organisational setting, both auditor and accountant can work hand-in-hand. The internal controls set by both auditors and accountants together are usually approved by the management.