Understanding the Core Difference Between Accountant and Auditor Roles
The two professions—accountant and auditor—seem synonymous for the outer world. While both professions play a crucial role in managing financial data, there is a wider gap in their roles and responsibilities. In this blog, let us explore the difference between an accountant and an auditor. This helps the business to distinguish and hire the right person for managing the books of accounts.
Bookkeeping vs. Accounting: What’s the Difference?
While bookkeeping focuses on recording daily transactions, accounting interprets and analyzes financial data for strategic decision-making. Understanding bookkeeping vs. accounting helps businesses allocate resources effectively.
- Duties and Responsibilities:
Accountants handle the day-to-day accounting of the financial transactions. Accounting involves interpreting, analysing, and summarising financial data into financial statements, budgets, and forecasts that aid in financial decisions.
Whereas the auditor reviews the financial records and statements prepared by accountants to ensure they are true and fair, reliable, and compliant with the laws and regulations.
- Scope of work:
Accountants, whether in-house or outsourced, assume various roles to implement internal control, manage payroll to disburse accurate salaries, maintain the books of accounts so that the management of the business could get insight into the profitability of the business and track the leakage of profits, maintain invoices and analyse the VAT implications so that accurate VAT returns could be filed, and much more.
On the other hand, the auditor acts as an independent entity to vet the effectiveness of internal control, check the potential for fraud or inaccuracies, provide guidance or an opinion to strengthen the existing processes and controls, and also provide a report on his opinion to align with statutory requirements.
- Objective:
The primary objective of an accountant is to accurately record the financial data for stakeholders and regulators and provide insights on the current standing of the financial position of the business.
The primary objective of an auditor is to verify the truth, fairness, and reliability of the financial records., thereby building the confidence of the regulatory bodies and stakeholders.
- Reporting:
An accountant reports to the management of the business. He is responsible for providing performance reports and metrics, which help them to make informed decisions.
An auditor, on the other hand, reports to the external stakeholders, such as regulatory bodies, shareholders, and sometimes management also. They are hired to provide an unbiased opinion on the financial record.
- Frequency of work:
Accountants work on a regular basis. Their role is continuous, involving periodical review of the financial information. The accountants maintain the records and share the present financial position of the business.
Auditors perform their duties periodically. Generally, they analyse the financial data that has already been recorded to provide their opinion to the stakeholders.
- Regulatory requirements in the UAE:
A business must comply with the IFRS, and accountants are responsible for ensuring that financial records meet the requirements of IFRS. They must also ensure proper VAT returns are filed within the stipulated due date.
An auditor in the UAE must be registered with the Ministry of Finance, which ensures that they are competent and qualified. They must adhere to the International Standards on Auditing.
- Qualification requirements:
An accountant often holds a bachelor’s degree in commerce. However, a CA or CPA can also provide accounting services.
On the other hand, the auditor must be a CPA, CA, or CIA (Certified Internal Auditor) and must be registered with the UAE Accountants and Auditors Association.
- Approach:
An accountant takes a proactive approach by analysing financial data to identify profit leakage and misuse of funds.
However, an auditor takes a reactive approach to strengthen the financial position of the business.
While accountants handle various financial tasks, outsourcing these services can provide businesses with cost-effective and expert solutions. Learn more about the benefits of outsourcing accounting services in Dubai to streamline your business operations.
For a business to sustain, accountant and auditor roles are crucial. Though their roles are different, they are complementary and dependent on each other. They both equip the business with metrics and reports to strengthen the financial integrity. In a way, where the accountant’s role ends, the auditor’s role starts. Understanding their differences will help the business leverage their expertise for sustainable growth.
We, at BCL Globiz, provide accounting services at affordable prices. We acknowledge that management’s time is best utilized for core business functions. To support this, we collaborate with auditors by: providing the necessary accounting documents and supporting calculations; resolving any questions or misunderstandings that may arise; and facilitating direct communication between the auditors and management to discuss significant issues as needed. This approach ensures that management’s time is preserved while focusing their involvement on key matters that require their attention.
You can contact our experts at punith@bclglobiz.com.
