Audit vs Assurance

Updated on April 24, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

The key difference between an Audit and Assurance is that an audit is the systematic examination of the books of accounts and the other documents of the company to know whether the statement shows a true and fair view of the organization. In contrast, assurance is how the different processes, procedures, and operations are analyzed.

Difference Between Audit vs Assurance

Audit and assurance are processes used for the evaluation of the financial record of the company. They are hand-in-hand processes. Audit and assurance are the processes of verifying the records available in the company’s accounting record as per accounting standard and principle, It also confirms whether the accounting record is accurate. The audit is the process of evaluating the accounting entries present in the company’s financial statement. Assurance is the process of analyzing and using it to assess accounting entries and financial records. An audit usually follows assurance.

This article looks at the top differences between Audit vs. Assurance.

What is an Audit?

The audit is the process of evaluating the accounting entries present in the company’s financial statement. The audit checks the accuracy of financial reports. Auditing includes making sure ethically presented, fairly presented, and accurate, and it also checks whether financial reports are as per accounting standards and principles. In addition, the audit tells about any misrepresentation done in financial records, any misuse of funds, any fraud, and any fraudulent activities done in a company or done by the company. Internal auditors and external auditors conduct the audits who are independent auditors.

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The employee of the company conducts an internal audit and belongs to the company’s audit department. The internal audit audits frequently and checks the record of the financial report, whether records are per accounting standards and accounting principles, and monitors and verifies whether the accounting record is accurate. The company also hires external auditors who provide an unbiased report of the financial statements. Many auditing firms are available that act as external auditors for many firms. The reports that these firms prepare are considered accurate and provide a true and fair representation of the company’s financial status.

Difference Between Audit vs Assurance

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Video Explanation of Audit vs Assurance

 

What is Assurance?

Assurance is the process of analyzing and using it to assess accounting entries and financial records. Assurance is verifying the records available in the company’s accounting record as per accounting standards and principles. It also confirms whether the accounting record is accurate. Assurance is the assessing process, operations, procedure, etc. The main aim of assurance is to check the accuracy of financial reports. It also assures all the stakeholders that there is no misrepresentation done in financial records, no misuse of funds, no fraud, and no fraudulent activities done in a company or done by the company. Assurance check financial reports are as per accounting standards and accounting principles. Assurance is applied to assess the process, the procedure, and operations, and these processes, procedures, and systems are observed closely to ensure the process is right and gives optimum results. Assurance specializes in assessing and improving the quality of the information in a company. It helps in decision making in an organization as it works on customer feedback, financial information, employee feedback, or areas where information is required in decision making an organization.

If you want to learn more about Auditing, you may consider taking courses offered by Coursera

  1. Auditing I: Conceptual Foundations of Auditing
  2. Auditing II: The Practice of Auditing

Audit vs. Assurance Infographics

Here we provide you with the top 5 differences between Audit vs. Assurance.

Audit vs Assurance Infographics

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Audit vs. Assurance – Key Differences

The critical differences between Audit vs. Assurance are as follows –

  • The audit is the process of evaluating the accounting entries present in the company’s financial statement. Audit checks the accuracy of financial reports, whereas Assurance is the process of analyzing and assessing accounting entries and financial records. Assurance also verifies the records available in the company’s accounting record as per accounting standards and principles, and it also verifies whether the accounting record is accurate.
  • The audit tells about any misrepresentation done in financial records, any misuse of funds, any fraud, and any dishonest activities done in a company or done by the company. In contrast, Assurance specializes in assessing and improving the quality of the information in a company. It helps in decision-making in an organization.
  • The audit is the first step, followed by assurance.
  • The audit is done by an internal or external auditor, whereas an audit firm does Assurance.
  • Auditing includes making sure ethical presentation is fairly presented and accurate, and it also checks whether financial reports are as per accounting standards and principles. In contrast, assurance is used to verify the accuracy of financial reports. It also assures all the stakeholders that there is no misrepresentation done in financial records, no misuse of funds, no fraud, and no dishonest activities done in a company or done by the company.

Audit vs. Assurance Head to Head Difference

Let’s now look at the head-to-head difference between Audit vs. Assurance.

Basis – Audit vs. AssuranceAuditAssurance
DefinitionThe audit is the process of evaluating the accounting entries present in the financial statement of the company. The audit checks the accuracy of the financial reports.Assurance is the process of analyzing and used in the assessment of accounting entries and financial records. Assurance is a process of verifying the records available in the company’s accounting record as per accounting standard and principle, and it also verifies that the accounting record is accurate or not.
StepThe audit is the first step.Assurance if followed by the audit.
Done byAn internal auditor or external auditor does the audit;An audit firm does assurance.
AimThe audit tells about any misrepresentation done in financial records, any misuse of funds, any fraud, and any fraudulent activities done in a company or done by the company.Assurance specializes in assessing the improving the quality of the information in a company. It helps in decision making in an organization.
UsesAuditing includes making sure ethically presented, fairly presented, accurate, and it also checks whether financial reports are as per accounting standard and accounting principle.The use of Assurance is to check the accuracy of financial reports. It also assures all the stakeholders that there is no misrepresentation done in financial records, no misuse of funds, no fraud, and no fraudulent activities done in a company or done by the company.

Conclusion

Audit vs. assurance is a hand in hand process used for evaluation of the financial record of the company. Auditing includes making sure ethically presented, fairly presented, and accurate. It also checks whether accounting reports are as per standard and accounting principles. Assurance checks there is no misrepresentation done in financial records, no misuse of funds, no fraud, and no fraudulent activities done and informs the same to all company stakeholders.

This article is a guide to Audit vs. Assurance. Here we discuss the top differences between Audit vs. Assurance and infographics and a comparison table. You may also have a look at the following articles –

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Comments

  1. Maria theresa quimsing says

    Very helpful.

  2. Prince J Nyuan says

    The lesson was beneficial.

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