Tax audit of the financial statements of an individual/organization who fall under the head of business and profession is important for the purpose of calculation of income tax that is liable to be paid by them. It is a method of examination of an individual’s organization return on tax. This is in compliance with various financial laws of the country. Income tax is a form of direct tax and it is paid directly by the tax-payer to the government based on the slab rate of his income.
The tax paid by individuals, companies and organizations vary in accordance with their income. The income tax audit mandates tax audit for entities. Conduct of audit results in proper maintenance of books of accounts. There are various assurance firms that provide these services as they have engaged professionals in the field of finance, accounts etc.
These are provided by independent professionals such as Chartered Accountants or Certified Public Accountants or Chartered Certified Accountants with the intention of improvement of context of information. The analysis helps us in creating informed and better decisions. One can find various assurance firms in Pune through online mode who are in need of such services. Assurance starts where audit ends. There are various differences between audit and assurance that can be explained as follows:-
- Definition Tax Audit v/s Assurance:- Audit involves checking the accuracy of the accounting entries that if it presents true and fair view. Assurance involves a deeper analysis if accounting entries and helps in vouching over the fact that the accounts of the company are not misrepresented and helps the organization in taking an informed decision. It deals with customer feedback, employee feedback etc.
- Performance of the function:- Tax Audit may be done by an internal auditor of the organization who might be an operational worker but on the other hand assurance is done by an audit firm. The auditors can perform assurance too.
- Aim of performing:-Tax audit is done in order to know the true and fair value of the statements and for the purpose of filing income tax returns of the entity but on the other hand assurance is related more to improving the quality of information of the company so that improvised and better decisions can be taken. Their concern is protecting the interest of the stakeholders so that any false information is not provided to them.
- Wider and narrower term:- Tax audit is just restricted to a particular area of finance whereas assurance is a wider term and involves in-depth analysis of the accounting entries of the company so that the quality of information of the organization can be improved.
- Step:- Tax audit is the first step but assurance is followed by the audit of the organization.
It can be concluded that the Income tax auditors in Pune can widen their role and responsibilities to assurance services as well. This will help them in widening their career prospects and would definitely result in professional fulfillment. This shall be acting as another feather in their hat.