Audit vs Assurance

The key difference between Audit vs Assurance is that Audit is the systematic examination of the books of accounts and the other documents of the company to know that whether the statement shows true and fair view of the organizations, whereas, the assurance is the process in which the different processes, procedures and the operations of the company 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 process. Audit and assurance is the process of verifying the records available in the company’s accounting record are as per accounting standard and principleAccounting Standard And PrincipleAccounting principles are the set guidelines and rules issued by accounting standards like GAAP and IFRS for the companies to follow while recording and presenting the financial information in the books of accounts.read more, and it also confirms that accounting record is accurate or not. The audit is the process of evaluating the accounting entries present in the financial statement of the company. Assurance is the process of analyzing and used in the assessment of accounting entriesAccounting EntriesAccounting Entry is a summary of all the business transactions in the accounting books, including the debit & credit entry. It has 3 major types, i.e., Transaction Entry, Adjusting Entry, & Closing Entry. read more and financial records. An audit usually follows assurance.

In this article, we look at the top differences between Audit vs. Assurance.

What is Audit?

The audit is the process of evaluating the accounting entries present in the financial statement of the company. The audit checks the accuracy of financial reports. Auditing includes making sure ethically presentation, fairly presented, accurate, and it also checks whether financial reports are as per accounting standard and accounting principle. 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.

The employee of the company conducts an internal audit and belongs to the audit department of the company. The internal auditInternal AuditInternal audit refers to the inspection conducted to assess and enhance the company's risk management efficacy, evaluate the different internal controls, and ensure that the company adheres to all the regulations. It helps the management and board of directors to identify and rectify the loopholes before the external audit.read more does audit frequently and checks the record of the financial reportFinancial ReportFinancial Reporting is the process of disclosing all the relevant financial information of a business for a particular accounting period. These reports are used by the stakeholders (investors, creditors/ bankers, public, regulatory agencies, and government) to make investing and other relevant decisions. read more, whether records are per accounting standard and accounting principle, and also monitor and verify that the accounting record is accurate or not. The company also hires external auditors who provide an unbiased report of the financial statements. There are many auditing firms available who 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.

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What is Assurance?

Assurance is the process of analyzing and used in the assessment of accounting entriesAccounting EntriesAccounting Entry is a summary of all the business transactions in the accounting books, including the debit & credit entry. It has 3 major types, i.e., Transaction Entry, Adjusting Entry, & Closing Entry. read more and financial records. Assurance is the process of verifying the records available in the company’s accounting record is as per accounting standard and principle, and it also confirms that accounting record is accurate or not. 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 standard and accounting principle. Assurance is applied to assess the process, the procedure, and operations, and these processes, procedures, systems are observed closely to assure the process is right, and it 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 informationFinancial InformationFinancial Information refers to the summarized data of monetary transactions that is helpful to investors in understanding company’s profitability, their assets, and growth prospects. Financial Data about individuals like past Months Bank Statement, Tax return receipts helps banks to understand customer’s credit quality, repayment capacity etc.read more, employee feedback, or areas where information is very much required in decision making in 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 difference between Audit vs. Assurance.

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Audit vs. Assurance– Key Differences

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

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 is as per accounting standard and principle, and it also verifies that 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 presentation, 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 hand in hand process and used for evaluation of the financial record of the company. Auditing includes making sure ethically presentation, fairly presented, 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 inform the same to all stakeholders of the company.

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

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