Confused about the difference between accounting and auditing? You’re not alone! Each of these business activities is related to finances, but they are actually two different processes. Read on for a comparison of accounting and auditing, as well as information on careers in each field.
Accounting and Auditing Defined
Accounting encompasses the day-to-day activities that businesses perform to manage their finances, from running payroll to tracking department budgets. It consists of recording, analyzing and reporting financial data, and is a required activity of for-profit and nonprofit businesses. Proper accounting allows businesses to determine profitability and cash flow – both important to growth.
Auditing is an evaluation of an organization’s financial practices, including accounting procedures, regulatory compliance and documentation. Audits can be performed by an employee (internal audit) or by an outside firm (external audit), to ensure financial accuracy and responsibility.
To put it more simply, accounting is the analysis of a firm’s finances, while auditing is the analysis of that analysis. Many financial professionals seek training in both accounting and auditing.
Degrees in Accounting and Auditing
Though different, the disciplines of accounting and auditing are connected; therefore, students majoring in accounting often take coursework in auditing. Those pursuing advanced accounting degrees may further concentrate on auditing. However, auditing is always a stand-alone major.
A degree program in accounting typically teaches a foundation of basic and business skills, to qualify graduates for a number of career opportunities. Coursework in communications, mathematics, social and physical sciences, and the arts develop analytical and critical-thinking skills.
Technical knowledge is gained through specialized classes in cost and budget control, accounting principles, federal income tax, and auditing, among others. Advanced coursework might include international accounting, business law or nonprofit accounting.
Careers in Accounting
Degrees in accounting may lead to employment in private industry, local, state and federal government agencies, public accounting firms or nonprofit organizations, in positions such as:
- Public accountant: Accountants perform a wide range of tasks for businesses, individuals and agencies. They prepare tax returns and analyze financial data. They also review an organization’s financial health and make recommendations for improvement. Many choose to become Certified Public Accountants, which requires passing a four-part national examination, and in most states, completing an extra 30 semester hours of college coursework. The Bureau of Labor Statistics (BLS) projects employment growth of 13% for accountants and auditors through 2022.
- Financial manager: Financial managers take the lead in guiding an organization’s financial health. They produce financial reports, direct investment activities and develop growth strategies. They may help with solving financial problems or look for opportunities for expansion. The BLS projects steady growth of 9% in this category through 2022.
- Tax Examiner: Tax examiners review individual and corporate tax returns for local or federal agencies. They may process tax returns, investigate overdue accounts, and conduct audits. They also ensure tax revenues are properly collected from citizens and businesses.
Careers in Auditing
A bachelor’s degree in accounting is typically required for the following auditing-related careers:
- Internal auditor: Internal auditors review organizations to determine how well funds are managed. They may point out ways to reduce waste, avoid fraud and improve profits. Jobs for accountants and auditors are projected by the BLS projects to grow by 13% through 2022.
- Information technology auditor: IT auditors review the controls for an institution’s computer and data processing systems. Their job is to ensure that financial data is accurate and reliable. The BLS projects employment for accountants and auditors to increase by 13% through 2022.
- Financial examiners: Financial examiners keep tabs on banks and other financial institutions, to make sure they comply with federal and state laws. They review financial information and loan documentation, and establish procedures to ensure regulatory compliance. Financial examiners also help consumers avoid predatory loans that charge excessive interest and can damage credit scores. The BLS projects steady job growth for financial examiners through 2022.
Launching a Career in Accounting or Auditing
Accounting is one of today’s most versatile and in-demand majors. By acquiring accounting’s analytical and critical-thinking skills, along with specialized auditing knowledge, you’ll be prepared for a number of challenging career opportunities.
If you’re detail oriented and enjoy math and business, you could be a great fit for a degree in accounting or auditing.