Difference between Audit vs Assurance
Auditing is the process of examination of the accounting information closely which is presented in the financial statements of the organization. And one of the major responsibilities of the auditing is to make sure that the financial reports are accurately maintained, fairly presented and deliberately prepared. All the reposts are formed accepting the accounting principles and standards and following all the compliances of reporting. Assurance is a set of processes of analyzing and assessing the process, operations, procedures, etc. Nevertheless, assurance is also to assess accounting information and financial records. The major concern of assurance is to check the accuracy of the accounting information and financial records and provide a regular update to stakeholders on financial reports and assure that there are no red flags, irregularities and false representation of information.
Audit
Auditing is required for all financial practices regulation such as auditing of an individual’s financial record for the taxation purposes. Auditing also regulates the dishonest business activities, improper utilization of the fund, misrepresentation of the financial statements, embezzlement, etc. Moreover,
There are generally two types of Audits:
- Internal Audits: It is usually conducted by the accountants to make sure that all the financial records are in compliance with standards in the organization. The company may outsource the auditing service to another external company specialized in this type of evaluation. So that the firm may obtain the unbiased view of its financial statements.
- Independent Audits: An audit which is conduct by the certified public accountant or chartered accountant who scrutinize the financial books and business transactions of a company with which he is not affiliated. The purpose of an independent audit to conflicts of interest and maintain the integrity of the audit standard.
Assurance
The motive of assurance is not to correct the issues in accounting records but to measure the appropriateness as per accounting standards, principles and follow its compliance. Moreover, assurance is applied to other aspects such as to assess the procedures and processes followed in operations. In such a case, processes and operations are closely observed and assurance will be provided whether the process is being conducted on the basis of the specified procedure to obtain optimum results.
Assurance setting body IAASB has classified separate standards for each of the three subclassified assurance engagement.
Any engagement that can fulfill the below-mentioned assurance engagement criteria as follows:
- Three party relationship
- Subject matter
- Criteria
- Gathering appropriate evidence
- Expression of opinion
An appropriate measure that is required for an assurance engagement to be an audit engagement should be a reasonable level.
Head To Head Comparison between Audit vs Assurance(Infographics)
Below is the top 8 difference between Audit vs Assurance
Key differences between Audit vs Assurance
Let us discuss some of the major differences between Audit vs Assurance:
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- The audit is the process of examination of the accounting information closely which is presented in the financial statements of the organization. While, assurance is a set of the processes of analyzing and assessing process, operations, procedures, etc.
- The aim of the audit is to present the financial information, reports, fairly, accurately and ethically accepting accounting standard and principal within compliance. However, Assurance is to evaluate the accuracy of accounting information and records to all stakeholders so that they can avoid any sort of red flags, misrepresentations or irregularity in the report.
- Auditor has given more rights to access any sort of information related to accounting as per International accounting standard which makes them more liable. While in assurance auditor has fewer rights compare to audit because it is limited to a specific region.
- In Audit, major concern towards all the stakeholders who invested in the organization and keep the record of each an individual. whereas, in assurance major concern towards a specific type of stakeholders for example management.
- To deal with multiple stakeholders, the company needs sufficient resources and time. So they can facilitate them. In against of audit, assurance requires limited resources to deal with stakeholders.
- In Audit, internal control or audit or external third party helps to increase the accuracy and reliability of information and avoid any sort of biases. While assurance is the next step following the audit which is done by the professional auditing body or board.
- Audit discloses any sort of misuse of the fund and any dishonest business activity, misrepresentation of financial statements. However, Assurance gives true information to the stakeholders for better decision making.
Audit vs Assurance Comparison Table
Let’s look at the top 8 Comparison Between Audit vs Assurance
|
S.no |
Audit |
Assurance |
|
1 |
A process of evaluating, accounting information presented in statements. | A process of analyzing and assessing processes, operations, procedures, etc. |
|
2 |
The aim is to present the financial information, reports, fairly, accurately and ethically accepting accounting standard and principal. | The aim is to ensure the accuracy of accounting information and records to all stakeholders that there are no red flags, misrepresentations or irregularity in the report. |
|
3 |
Rights and liabilities of an auditor is higher | An auditor has comparatively lesser right than audit |
|
4 |
The audit is in line with the International auditing standards | Assurance terms may restrict the practitioner only to a specific area. |
|
5 |
The audience includes generally all stakeholders | Restrict to just one type of stakeholder for example management. |
|
6 |
The Time & resources required are higher | The time and resources are required comparatively less than an audit. |
|
7 |
Internal control or auditing or external third party helps to enhance the reliability of information. | Assurance is the step that follows an audit and usually done by a professional auditing body or board. |
|
8 |
Audit reveals any misuse of the fund and any dishonest activity in financial statements and gives accurate information. | Assurance follows an audit and gives true information to the stakeholders for better decision making. |
Conclusion
Audit vs Assurance are the processes that are linked to each other and are utilize most in evaluating a company’s financial records and its performance. Audit vs Assurance are linked to each other both processes are used to verify the information on the company’s accounting standards and principles. Assurance is the next move to the audit while an audit is processed internally by the company’ account officer or external agency specialized in audits. Even though, assurance is conduct by a professional auditing body or audit board. So there should not be any misrepresentation or red flags in the accounting records and can supply essential information to stakeholders which is necessitate for better decision making.
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