Audit and assurance are two key tools used to examine the financial documentation of a company. It is a fast-growing sector generating huge demands for auditors and accountants. As per the Bureau of Labor Statistics, the projected employment growth for auditors and accountants is 6% between 2021 to 2031.
The global auditing market was worth $217.7 billion in 2021. By 2026 this worth is projected to soar as high as $287.2 billion. This fast pace can be accrued to sterner governmental rules and regulations and thus opens up an ocean of job opportunities. Thus, if your goal is to become an auditor, you have a range of possibilities in front of you.
But before kick-starting your auditing career make sure you are aware of why this service holds such importance for a company.
Here’s an article on auditing and assurance, which will also help you to choose a suitable ACCA course.
Audit: What is it?
Before taking an ACCA course, first, understand what audit is. It is a process that helps to evaluate the accounts in any organisation’s financial statements. It examines the financial accuracy of the company. It further ensures that the financial reports are represented fair and square, presented ethically and accurately.
Auditing examines if the financial reports follow accounting principles and standards. It scrutinises any fraud and looks for misinterpretations in the records and fund misuse. Some internal auditors work in the organisation’s audit department and keep an eye on the company’s finances. Companies also recruit external auditors for an unbiased financial statement review.
Assurance: What is it?
Assurance is an independent professional amenity offered by certified accountants. It improves the content or quality of information and thus enhances decision-making. It reduces information risk and boosts the relevance, value and transparency of information to be disclosed in the market.
This service verifies the accounting records of a company. It judges whether the records are following the principles and standards of accounts or not. This amenity further guarantees the company’s stakeholders of no financial misinterpretation in the records.
Key differences between audit and assurance
While the two services might look very similar, there are multiple differences. Read on to understand the two amenities better.
- For financial record verification purposes, assurance services follow auditing. The first step is the audit, and then we move on to assurance.
- External or internal auditors are responsible for conducting audits. Assurance services are exclusively offered by audit firms.
- Audit works to find out financial statement misinterpretations. It looks for fund misuse, and fraudulent activities performed in the company. Assurance aids in a company’s decision-making by refining a company’s information quality.
- While audit scrutinises financial record accuracy, assurance services work to analyse account entries and assess financial records.
Why are audits and assurance important for companies?
Both services are essential for a business, and here’s why.
Importance of internal audit
- It ensures that a business venture is following rules and regulations.
- It cross-checks the company’s financial information.
- It examines the processes of the company’s operation.
- It ensures the effectiveness of risk reduction procedures and policies.
Importance of external audit
Securing tax compliance
External audit ensures that your business is up for unbiased assessment. It ensures compliance with tax regulations, as the external auditor will not be wavering from delivering bad news.
Auditing from an outside source, which has no relation to a company’s success or failure, ensures credibility. External auditors don’t directly work under any company and are unbothered by the company’s pressure. This ensures that the words of external auditors are more credible than those of an internal auditor.
Proper internal process criticism
Internal auditors are an intricate part of a company. Hence, it is difficult for internal auditors to provide proper criticism of the enterprise. Here’s the vitality of an external auditing organisation, which keeps a strong eye on an enterprise’s operations and offers quick criticism. Some external auditors also offer a suitable action plan to mitigate the highlighted problems.
Checks the quality of internal audit
In many organisations, internal auditors may be underqualified or do not have sufficient experience. Hence, the external auditors can keep them under watch, and cross-check their performance to ensure that audit quality is up to the mark.
Importance of assurance services
Creating systems takes time. However, fixing the errors after it has gone long takes more time. This is where assurance services come in, and look for errors on time. This gives the company a heads-up to rectify the mistakes early on.
Initially, assurance services might look costly, however, if you look way forward it saves tons of money. Preventing problems is always more affordable than indulging money in fixing errors.
Amplifies customer confidence
Once your company gets a good name for being consistent and offering quality service, customer confidence automatically comes in. With assurance service, the customers believe that they’re investing money in commodities that are worthy of the price.
For instance, quality assurance plays a vital role in the rise of the food industry. Consumers in such an industry demand safe food for consumption, and their confidence is vital for the functioning of the industry.
Assurance services magnify profit by firstly saving the money otherwise wasted on extra materials. Secondly, a company involving assurance services tends to have an edge in the market. The customers, once assured of the product quality, willingly pay more. Thus the companies can raise the product price and push their profit margin.
Now that you know how helpful audit and assurance services are to an enterprise, you’re one step closer to fulfilling your dream of becoming an auditor. The next step is to enroll yourself in a suitable course, to enhance your knowledge base and bag the best job in the industry.
One such course is offered by Imarticus, named the ACCA course or Association of Chartered Certified Accountants, UK.
This certification course is globally recognised and is awarded by the United Kingdom ACCA body. It is widely accepted in over 180 countries and offers attractive career opportunities. Here are a few course highlights:
- Over 7500 top ACCA-approved employers
- Pre-placement boot camp which offers interview preparation sessions, classes for personality development, soft skill development, etc.
- Exhaustive study materials comprising practice papers, books, question banks, supplementary materials, etc.
- Expert faculty with CA, Management Accounting, CPA, and FCA qualifications, who provide personalised mentoring.
Log in to Imarticus and find out more!