The Differences Between Audit and Assurance
Audit refers to the systematic assessment the auditors will perform on the company’s books of accounts as well as other documents so that they can determine if those statements are presenting the true and fair view of the financial position of the company. On the other hand, assurance means the process of analysing various operations, procedures, and processes of the company by the auditor.
An auditor from an audit firm in Johor Bahru will conduct an audit to evaluate the accounting entries that appear on the company’s financial statements. The audit assesses whether the financial reports are accurate. The audit process includes ensuring that the company has presented its financial statements accurately, ethically and fairly. Besides, the auditors will examine whether the company has prepared its financial reports according to suitable accounting standards and principles. An audit can reveal whether the company or its staff has misused the funds, done any misrepresentation in the financial records, or committed any dishonest activities or frauds. The external and internal auditors (Also see What is Over-auditing of Internal Audits?)who are independent will perform audits for a company.
The auditors will use assurance, which is a process of analysing when they examine the financial records and the accounting entries of the company. Assurance means the process of checking the records that the auditors can find in the accounting records of the company to see if they comply with the accounting principles and standards, and assess the accuracy of those records. The primary objective of assurance is to examine whether the company’s financial reports are accurate. Also, it helps in assuring the stakeholders that the company and its staff have not done any fraud or dishonest activities or has not misrepresented its financial records (Also see Audit Procedures That Help in Detecting Fraud). Auditors will observe the systems, procedures and processes to ensure their accuracy and their ability to provide optimum results. Assurance specialises in examining and making improvements on the company’s documents. Also, the management may rely on it for decision making as assurance focus on the feedback of the clients and its employees, financial data and other areas.
Differences between Audit and Assurance
Firstly, the audit is defined as the process of assessing the accounting entries that a company has presented in its financial statements to check accuracy (Also see Types of Audit – Financial Statement Audit). On the other hand, the auditors will use assurance to examine the financial records and accounting entries of the company. This is a process of checking the accuracy of the financial records and determining whether those records comply with accounting principles and standards.
An audit aims to reveal whether the company or its staff has done any frauds, misrepresented its financial records or has misused the company’s funds. Conversely, assurance focuses on improving the quality of a company’s financial data besides helping in decision making.
Apart from that, an external or internal auditor may conduct an audit, whereas an audit firm will provide assurance. Besides, an audit is the first step, and it is followed by assurance.