Tax audit is carried out by an audit organization in the framework of a special task to review tax reports in order to express an independent opinion on the degree of reliability and compliance with the standards established by law, the order of formation, recording and payment of taxes and other payments to budgets of various levels and extra budgetary funds by an economic entity. Independent tax audit is always relevant for both large companies and medium-sized ones. Audit of tax accounting can significantly reduce losses in the payment of various fines.
Tax audit is required in order to determine
- The correctness of the calculation applicable to the activities of the company taxes
- Statuses of obligatory payments for the current period
- The legality of using tax breaks
- The degree of compliance of the tax accounting system with legal requirements
- Organizing and conducting a tax audit: order and participants
- Tax audit is an initiative procedure.
- The scope and format of the planned audit is set by the client.
As part of the tax audit, a thorough check is carried out on all aspects of the organization’s activities that affect its taxation system.
- Verification is carried out by licensed auditing organizations.
- The tax audit procedure conditionally consists of several stages:
- Examination of the tax system
Validation of tax calculation and payment
- Drawing up a report describing the errors identified during the inspection and suggestions for their elimination
At the first stage, the auditors conduct an analysis of all aspects of the organization’s tax system and identify problematic aspects that require more detailed study.
Next, experts verify the correctness of tax reporting and filling out tax returns, analyze tax bases for each type of tax being audited.
Benefits of tax audit
Audit of tax accounting allows you to identify errors, analyze and develop measures to eliminate them. A tax audit allows you to avoid inaccuracies in the payment of taxes, which entail fines and penalties. For the Auditing outsourced services this is a very important part now.
Tax audit result
The result of the audit of tax accounting is:
Confirmation of the correctness and reasonableness of calculations for the tax liabilities of the organization for a certain period,
As well as
- Evaluation of the method used in calculating taxes in disputable situations
- Analysis of the organization of separate accounting for VAT and the development of methods for optimizing VAT taxation
- Analysis of the existing methodology for the assessment of work in progress and finished goods
At the end of the audit, the issuance of an audit report is not expected, since the audit is carried out of the tax accounting system, and not the accounting one. The result of an audit of the accounting of taxes and fees is a report that includes a full description of the violations found, recommendations for eliminating errors and further maintaining tax accounting.