What’s in this article
Difference Between Accounting and Auditing
Accounting: This is all about keeping track of a company’s financial activities. Furthermore, it includes recording transactions, preparing financial statements, and managing financial records to ensure everything is accurate and up-to-date. Moreover, companies can outsource their bookkeeping to accounting services in Singapore for easier management.
Auditing: This comes in after accounting has done its job. In addition, auditors check the financial statements prepared by accountants to make sure everything is correct and follows the rules. Moreover, they look for any mistakes or signs of fraud to ensure the financial reports are reliable.
In short, accounting sets up the financial records, and auditing checks to make sure those records are spot-on.
Two Types of Auditing: Internal and External
Internal and external audits have some differences, in terms of appointment, objectives, and responsibility.
Internal Audits
These audits focus on evaluating and enhancing the effectiveness of a company’s governance, risk management, and control processes. Additionally, these audits are reported to the company’s board and senior management as part of the organization’s governance structure.
External Audits
External audits, in contrast, are typically reported to shareholders or members outside the company’s internal governance. Their primary purpose is to provide credibility and reliability to the organization’s financial reports for its stakeholders.
Internal vs External
While internal auditors address critical issues related to the company’s survival and success, they go beyond financial risks to consider broader aspects such as the company’s reputation, growth, environmental impact, and employee treatment. However, external auditors, on the other hand, mainly focus on verifying the accuracy of financial statements.
Benefits of Auditing
There are multiple benefits of regular auditing to ensure compliance and proper governance of a company.
Non-Compliance of Audit Rules
Businesses in Singapore face serious penalties for non-compliance with regulatory requirements on auditing under the Companies Act 1967. Examples of non-compliance include:
- Failing to designate an auditor within the specified timeframe or submitting false information to ACRA (Accounting and Corporate Regulatory Authority) in Singapore is regarded as an offence that can incur penalties.
- As stated in Section 173A(1) of the Act, a company must notify the Registrar within 14 days of an appointment or resignation of an auditor.
Non-adherence to these provisions is considered an offence under Section 173H(1) of the Act, where any company officer found responsible will be deemed guilty of an offence and may face penalties upon conviction. These penalties can include a fine of up to $5,000 and a default penalty.
FAQs
Professional accounting services ensure accurate financial records, compliance with tax laws, informed decision-making, and access to specialized expertise, all while saving time and resources.
Yes, professional accounting services assist small businesses during audits by organizing financial records, providing necessary documentation, and addressing potential issues to mitigate penalties or fines.
The typical accounting services include account consolidation, preparing of financial statements, tax filing, audit, and advisory services.
