Are you wondering what’s the difference between accounting and auditing? Do you want to know which one do you need? If so, here’s 5 differences between accounting and auditing in plain English.
1. Different type of work
First of all, and to get it out of the way, your auditor/reviewer is not your accountant. He/she can’t do bookkeeping or any accounting wonk to remain independent. Otherwise, he/she will be self auditing/reviewing. If you need accounting work (e.g. bookkeeping, write up, financial statements preparation that involve booking adjustment entries, etc.), then you need a CPA Accountant, not an auditor or a reviewer. Attestation services (Audit, Review, and Compilation) requires specific procedures to be performed, provide a level of assurance (reasonable, limited, or no assurance), and issue Auditor’s or Accountant’s report. On the other hand, Accountants don’t have to give an opinion, issue reports, or follow any attestation procedures (e.g. send bank confirmation).
Certified Public Accountants (CPAs) play a vital role in ensuring financial transparency, accuracy, and compliance for businesses and individuals. Among their various services, attestation engagements—such as audits, reviews, and examinations—are highly regulated and require strict adherence to professional standards. A common question among clients and some CPAs themselves is whether a CPA who performs attestation services can also undertake bookkeeping or general accounting work for the same client. The short answer is: generally, CPAs who perform attestation services should not perform bookkeeping or routine accounting work for the same client.
2. Regulatory Framework and Professional Ethics
The primary reason for this separation stems from the fundamental principles of independence and objectivity that underpin the CPA profession. The American Institute of Certified Public Accountants (AICPA) and other global accounting standard setters emphasize that CPAs must maintain independence—both in appearance and in fact—to provide credible attest services. When a CPA is actively involved in day-to-day bookkeeping or accounting tasks for a client, this creates a potential conflict of interest that can impair independence.
The AICPA’s Code of Professional Conduct explicitly states that independence is compromised when a CPA performs certain non-attest services for an attest client, especially if they also perform audit or review engagements for the same client. For instance, performing bookkeeping or routine accounting functions can lead to situations where the CPA might be involved in preparing financial statements that they later attest to, which could impair objectivity or create a perception of bias.
3. Separation of Services for Credibility and Objectivity
The core reason for maintaining a clear boundary between bookkeeping/accounting and attestation services is to ensure the credibility of the attest engagement. Bookkeeping and basic accounting involve preparing and maintaining financial records, which can compromise the objectivity of an auditor or reviewer if the same CPA is involved in both.
For example, if a CPA performs the client’s bookkeeping, they are involved in the preparation of the financial data, making them a “preparer” under independence rules. This status disqualifies the CPA from performing an audit or review of those financial statements for that same client unless certain safeguards are implemented. Such safeguards often involve engaging a different CPA or firm to perform the attest service to ensure independence remains intact.
4. Practical Implications and Best Practices
Many firms adopt policies that restrict CPAs from undertaking both types of work for the same client to maintain integrity and uphold professional standards. This separation also offers clarity for the client, safeguarding the objectivity and reliability of the financial statements and reports issued.
In practice, if a client seeks assistance with bookkeeping, the CPA may recommend engaging a different staff member, a different CPA, or a separate firm altogether for attest services. This approach helps prevent conflicts of interest and fosters trust in the financial information presented.
5. Exceptions and Special Circumstances
While the general rule discourages CPAs from mixing bookkeeping with attest services on the same client, there are exceptions under specific circumstances and strict safeguards. Some jurisdictions or professional standards might permit certain non-attest services if they are adequately documented, supervised, and involve independent personnel. However, these exceptions are rare and typically require rigorous compliance and disclosures.
Conclusion
In summary, CPAs who perform attestation services are ethically and professionally expected to avoid performing bookkeeping or routine accounting work for the same client. This separation ensures the independence, objectivity, and credibility of financial reporting, which are cornerstones of the CPA profession. Both firms and clients benefit from this clarity, fostering trust and confidence in financial statements and attestations. Maintaining these boundaries is not only a matter of compliance but also a demonstration of professional integrity.
Know you know what is the differences between Audit and Accounting. If you need an compilation or financial statements preparation, please read through Financial Statements Compilation and Preparation. Or you can contact us.
Know you know what is the differences between Audit and Accounting. If you need an compilation or financial statements preparation, please read through Financial Statements Compilation and Preparation. Or you can contact us.
