Distinguish between Accountancy and Auditing.
Accountancy and Auditing are not the same thing. Following are the differences between Auditing and Accounting:
Origin: Accountancy was originated in 1494 when Lucas Pacioli invented double entry system of book keeping. Whereas, Auditing was originated in 1913 with the formation of Indian Companies Act,1913. It got its importance with the formation of Institute of Chartered Accountants Act, 1949 and Companies Act 1956.
Nature of work: Accountancy includes Preparation of Trial Balance, Trading and Profit and Loss Accounts, Balance Sheet and entries for adjustment and rectification of errors. Auditing examines and verifies the financial records and statements of affairs prepared by the accountants. It includes examination and verification of financial records in order to ascertain that they depict a true and fair view of the state of affairs of the company.
Report: An accountant is not required to prepare a report of the work done by him and submit his report to the management. On the other hand an auditor has to prepare a report for the work of audit done by him. The submission of auditors report is a must.
Qualification: A person need not be a Chartered Accountant to be an accountant. He should only possess the knowledge of accountancy. On the other hand to be an auditor, a person must be a Chartered Accountant having membership of the Institute of Chartered Accountants of India.