Difference Between Audit and Non-Audit Services

Financial analysis and reporting is the essence of a modern business. They are decision-making tools that help the business see a snapshot of the company’s financial position.

Financial auditing is a process of examining an organization’s financial records to determine if they are in terms of the rules, regulations, and laws. In modern times, auditors have been trying to provide executive services such as audit and non-audit services to their clients.

Audit vs Non-Audit Services

The difference between the two-audit and non-audit services is that audit services are usually a statutory requirement for a majority of entities whereas non-audit service requirements are voluntary.

Audit vs Non audit services


Comparison Table

Parameter of ComparisonAudit servicesNon-audit services
MeaningAudit services refer to those services that evaluate the financial statements of the organization to ensure that they are done fairly.Non-audit services are the services provided by an audit firm that is not connected with the review of the firm’s financial statements.
CostAudit services are considered to be a costly affair because audit firms not only offer consultancy services but also help evaluate the financial information of the audit firm.Non-audit services are cost-effective since the auditors, having good audit knowledge, need not prepare the financial reports of their client.
Speed of reportingAuditors face strict time constraints within which they have to perform tasks essential for the evaluation of financial statements.Time is not a problem when it comes to non-audit services.
Scope and natureThe main scope is to evaluate and ensure the fairness of the financial statements which have been laid down in the company’s statute.The scope and nature of non-audit services are not laid down in the company’s law, and hence will be agreed between the entity and the audit firm.
OpinionAudit services provide assurance services meaning an opinion is rendered on the fairness of the financial statements.Non-audit services are any other services where an opinion is not rendered.


What is Audit Services?

Audit services are the services that are provided by an auditor to their client, to provide a true and fair representation of the financial position of the audit firm, in terms of relevant financial reporting.

Audit services take place both in the private and public sectors and are essential to businesses, enterprise owners, stakeholders, lenders, and investors.

Given below are some of the various audit services provided by audit firms:

  1. Operational, financial, assurance services.
  2. Consulting service.

Objectives of Audit services:

Running a business can be challenging and business owners often do not have the time to manage every business operation. This is where auditing services come in.

  1. Maintaining the efficiencies and effectiveness of all business operations.
  2. Finding and preventing errors and frauds
  3. Evaluating unethical business practices

Advantages of audit services:

An auditing service is very necessary because a company without audit services would not be able to create appropriate and fair financial reports for the firm. Here, given below are some of the advantages of audit services:

  1. If there is any loss in the property or business, compensation is provided by insurance companies based on audited statements made by the auditor.
  2. Financial institutions provide loans based on audited statements (of the last five years). Hence audit firms can obtain loans.
  3. Auditing shows the profitability and financial position of an organization which creates reputation in the eyes of the public. Thus, audit services help to increase the goodwill of an organization.

Disadvantages of Audit services:

The major risk in audit services is procuring untrue conclusions from the financial reports. Some of the other disadvantages under audit services include:

  1. Time factor: Auditors would have to evaluate the financial book of accounts of an entire year within/in a few weeks. Hence, a major lack of time is considered to be one of the limitations of auditing.
  2. An auditor’s qualification is directly proportional to the quality of the audit report. Unskilled auditors provide poor quality audit reports.
  3. The risk of poor quality audit reports can further increase when there is a conflict of interest between the audit team members.
audit services

What is Non-Audit Services?

Non-audit services, unlike audit services, are those services that are not related to evaluating the financial statements of the firm.  These services are most commonly provided by a qualified public accountant.

Advantages of providing Non-audit services:

  1. Non-audit services performed by an auditor results in an increase in the revenue structure of a firm.
  2. The auditors have a detailed understanding of the clients and hence are most likely to render a better audit service to their clients.
  3. The clients are charged a lower audit fee since the non-audit services take less time in auditing the financial statement of a firm/client.

Disadvantages of providing Non-audit services:

  1. The auditor is likely to be biased since the nature of its financial statements is voluntary and also his client may threaten to take the business deal to another audit company unless the client gets an audit beneficial to them.
  2. The auditor would rather not provide any sort of auditing or consultancy services to the same client since this would result in a conflict of interest between the clients. In this case, auditors must submit unbiased financial reports of a company whereas consultants might have to become subjective to maximize company profits by avoiding high taxes.
  3. Incorrect reports: The auditors and consultants study the information as given by their clients. In case the client gives out incorrect data, the auditors and consultants, providing the required services to the client, will unintentionally compose the same data which would result in incorrect reports.

Non-audit services can be mainly divided into three categories:

a. Statue services which include:

  1. legal necessities
  2. contractual necessities

b. Efficient services regarding the current knowledge of the business which the auditor provides to their clients. These include:

  1. fraud detection
  2. tax planning

c. Majority of firms provide services such as:

  1. management expertise
  2. Human resource expertise.
non audit services

Main Differences Between Audit and Non-Audit Services

  1. Audit services generally refer to those services that assess the financial statements of the firm and guarantee that all the reports are done fairly and truly. Non-audit services do not deal with the evaluation of the financial statements of the firm.
  2. Audit services would result in a costly affair since audit services deals with detailed audits that are expensive. So the auditor has to limit the scope of his audit services and use simple techniques. Non-audit services are cost-effective.
  3. Audit services face strict time restraints since in audit firms they have to prioritize tasks and evaluate the financial statements of the firm in a jiffy. Non-audit services comparatively take less time to form a report.
  4. The main scope of an audit service, as laid down by the company’s statute, ensures that there are no frauds or misrepresentations in the financial statements. Non-audit services are not written in the company’s laws and will be decided voluntarily.
  5. In audit services, opinion is rendered on the fairness of financial statements. In non-audit services such an opinion is not rendered.


  1. https://www.tandfonline.com/doi/abs/10.1080/00014788.1996.9729528
  2. https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1628&context=soa_research
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