What is the Difference Between Audit and Assurance?
🆚 Go to Comparative Table 🆚The main difference between an audit and assurance lies in their definitions, aims, and the scope of their examinations. Here are the key differences:
- Definition: An audit is the systematic examination of a company's financial records and statements to confirm their accuracy and fairness. Assurance, on the other hand, evaluates the processes and procedures that lead to the financial data appearing on the financial statements.
- Aim: An audit verifies or debunks the accuracy of information on a company's financial reports. Assurance services provide an independent look at a company's accounting records or processes, with the aim of providing confidence in the company's financial information.
- Scope: Audits are typically done by internal or external auditors and can be categorized into three types based on the auditor: internal audit, external audit, and government audit. Assurance services are broader in scope and include various processes and procedures, such as financial statement audits, compliance audits, and process audits.
In summary, an audit focuses on verifying the accuracy and fairness of a company's financial records and statements, while assurance evaluates the processes and procedures that lead to the financial data appearing on the financial statements.
On this pageWhat is the Difference Between Audit and Assurance? Comparative Table: Audit vs Assurance
Comparative Table: Audit vs Assurance
Here is a table that highlights the differences between audit and assurance:
| Feature | Audit | Assurance |
|---|---|---|
| Definition | An audit verifies or debunks the accuracy of information on a company’s financial reports. | An assurance evaluates the processes that lead to the financial data appearing on the financial statements. |
| Aim | An audit aims to ascertain the accuracy and authenticity of a company's financial records, detecting any misrepresentation, misuse of funds, fraud, or fraudulent activities. | Assurance specializes in assessing and improving the quality of information in a company. |
| Agent | An audit can be conducted by an internal auditor or an external auditor. | Assurance is typically conducted by an audit firm. |
| Rights | Auditors have extended rights to access any kind of information. | Assurance auditors have fewer rights, as the process relates to a specific area in the company’s financial records. |
| Process | Audit involves thoroughly evaluating all the accounting entries available in the company’s financial statement. | Assurance evaluates the accuracy of given financial reports/records and conveys the authenticity of the information. |
| Conducted by | An audit can be conducted by an internal auditor or an external auditor. | Assurance is typically conducted by an audit firm. |
| Relation | Audit is followed by assurance. | Assurance is followed by audit. |
| Reporting | Audit reports focus on the accuracy and authenticity of financial records. | Assurance reports assess the quality of information in a company. |
| Requirement | Audit is mandatory for publicly traded companies. | Assurance is not mandatory but is often sought by companies to improve their financial reporting. |
| Scope | Audit is wider and covers the entire financial records of a company. | Assurance is more focused and specific, targeting particular aspects of the company's financial records. |
Read more:
- Accounting vs Auditing
- Audit vs Evaluation
- Accountant vs Auditor
- Insurance vs Assurance
- Review vs Audit
- Audit vs Inspection
- Financial Audit vs Management Audit
- Audit Risk vs Business Risk
- Auditing vs Investigation
- Internal Audit vs External Audit
- Information System Audit vs Information Security Audit
- Audit vs Research
- Internal vs External Audit
- Internal Audit vs Statutory Audit
- Assure vs Ensure
- Financial vs Operational Auditing
- Internal Audit vs Internal Control
- Quality Assurance vs Quality Improvement
- Quality Assurance vs Quality Control