At certain times, there are certain confusions between audit and assurance. However, there are certain key fundamental differences that can be used to explain the difference between both of these commonly used terminologies.
- Firstly, it can be seen that auditing is the process of evaluating the accounting entries present in the financial statement of the company. As a matter of fact, audit checks the accuracy of financial reports. On the other hand, assurance is the process that requires analyzing and using the assessments from accounting entries and financial records. In the same manner, assurance is also about verifying the records available in the company’s accounting record o confirm that it is as per accounting standards and principle and it also verifies that accounting record is accurate or not.
- Audit mainly describes any exiting misrepresentations that are done in the financial records. These may include any misuse of funds, or any fraud and any dishonest activities that have been done in the company. On the other hand, Assurance specializes in assessing and improving the quality of the information in the company. The main purpose is to act as a decision-making tool in the company.
- The audit can be broadly categorized into internal audit and external audit. Assurance is always done by an audit firm.
- The Auditing scope includes making sure that the Financial Statements are ethically presented, fairly presented, and accurate. Furthermore, it is also required to check whether financial reports are as per accounting standards and accounting principles. On the other hand, assurance is used to check the accuracy of financial reports. Similarly, it also provides a guarantee to all the stakeholders that there is no misrepresentation done in financial records, or there is no misuse of funds, and no fraud and no dishonest activities that are being conducted within the scope of the operations of the company.
- The main aim of the audit is to present the financial information, reports, fairly, accurately and ethically accepting accounting standards and principals within compliance. However, Assurance is to evaluate the accuracy of accounting information and records to all stakeholders so that they can avoid any sort of red flags, misrepresentations or irregularity in the report.
- As far as the work of the auditor is concerned, it can be seen that the auditor mostly has more rights to access any sort of information pertaining to accounting, since they are supposed to be liable when it comes to IFRS. On the other hand, assurance auditor has fewer rights compared to audit because it is limited within a specific region.
- The scope of the audit work mainly covers all the stakeholders who are invested in an organization and keeping the record of each individual. However, with assurance, the major concern is towards a specific type of stakeholders for example management.
Therefore, it can be seen that the overall role of the audit and assurance overlaps when it comes to devising strategic insights about the business.