Accounting, auditing, and bookkeeping are interrelated financial processes that businesses use to manage their financial records, ensure accuracy, and comply with regulations. While they share similarities, each process has its distinct purpose and function. Here’s an overview of accounting, auditing, and bookkeeping:
Bookkeeping serves as the basis for generating financial statements and other financial reports required for decision-making and compliance.
Accounting: Accounting builds upon the foundation of bookkeeping. It involves the process of summarizing, interpreting, analyzing, and reporting financial information. The main objectives of accounting are:
Accounting may involve more complex tasks such as accrual accounting, depreciation, inventory valuation, and financial ratio analysis. It often requires specialized knowledge and expertise, and businesses may rely on professional accountants to handle accounting functions.
Auditing: Auditing is an independent examination of an organization’s financial records, systems, and processes. It aims to verify the accuracy, reliability, and compliance of financial information. Auditing serves several purposes:
Auditing can be conducted internally by an organization’s internal audit function or externally by independent auditing firms. External audits are often required for statutory purposes or when a business seeks external financing or investment.
It’s essential for businesses to maintain accurate financial records through proper bookkeeping practices, utilize accounting principles for financial reporting and decision-making, and periodically undergo auditing to ensure transparency, compliance, and financial integrity.
At Vision Business Consulting, our Accounting & Auditing consultants can assist businesses in these areas, depending on their specific needs.
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