Every company in Singapore must get its financial statements and accounting records audited at least once in every year. However, if your company meets the exemption criteria introduced to the Company Act 2014, you might be the exception to this statutory requirement.
This is great! But it doesn’t diminish the need for hiring a professional accountant and hiring an audit firm’s services in Singapore. One could say that these services are indispensable.
As a business owner, what should you know about these services? Are there any differences? Or, can one substitute the roles performed by the other?
We’ve prepared a list of differences between accounting and auditing to help you know more about the two services, essential to any business.
Definition, focus and objective
Accounting is the continuous process of capturing, categorising, abridging, scrutinising, and presenting the financial transactions, records, and statements of profitability and financial position of an organisation or entity. There are various branches of accounting like cost accounting, management accounting, financial accounting, among others.
An accountant focuses on accurate recording and presentation of all financial transactions and statements. Their objective is to determine the financial position, profitability and performance of the company.
Auditing, on the other hand, is the judicious inspection of the financial records or statements of a business or an organisation. It entails carrying out an examination of the financial statements and giving an impartial opinion on whether the financial statements and records are an accurate and reasonable reflection of the business’ actual financial position. The focus of an auditor, or an audit firm’s services in Singapore, is to verify the accuracy and reliability of the company’s financial statements and records. They aim at giving the business owners an independent opinion about the credibility of the company’s financial records, and position.
Nature of operation
Accounting and auditing work generally differs in the timing, level of detail, the type of checking, and coverage. Whereas accounting is carried out continuously, auditing work is carried out periodically. Accounting is detailed and aims to capture all particulars related to financial transactions, records and statements. However, auditing stays away from the details, using samples from records to ascertain the correctness.
Also, accountants mainly focus on correctness of present-day transactions and statements. However, auditor’s concern is inspecting historical records to ascertain the accountant’s work.
If you have a strong accounting team, you’ll need an experienced audit firm’s services to ensure that your financials are healthy.
Governance, compliance and performance
To conclude, accountants in Singapore follow accounting principles set and reviewed by the Accounting Standards Council. But accountants can apply some discretion in application depending on the industry and business model. For instance, a mobile app development company can decide when to establish the technical feasibility of an app development project. Thus, it affects the capitalisation of the overall project cost.
While discretion in accounting could vary according to a company’s leadership, Singapore’s Standards on Auditing – issued by the Institute of Singapore Chartered Accountants (ISCA) – is not so flexible. Your company relies on integrity-based audit services in Singapore to ensure that there’s no misuse or abuse of discretion by accountants.
You may have your accounting team and internal auditors. But as mentioned in the opener, ACRA rules require that every company undergoes an annual independent audit. Thus, you should reach out to firms providing audit services in Singapore that have a clean track record, and employ qualified auditors.
OneStop Professional Services is your comprehensive solution to corporate services, including audit, accounting, and company secretarial services. Enquire with us for your company’s administrative and corporate needs.