Auditing
An audit is an independent examination of financial information of any
entity, whether profit oriented or not, irrespective of its size or legal
form when such an examination is conducted with a view to express an opinion thereon.
Audit is an important term that describes the examination and verification of an organization’s
financial records.
It is to ensure that financial information is represented fairly and accurately.
Also, audits are performed to ensure that financial statements are prepared in accordance
with the relevant accounting standards.
The three primary financial statements are:
1. A Profit and Loss account or an Income and Expenditure Account
2. Balance sheet
3. Cash flow statement
(A) Statutory Audit
A statutory audit is a legally required review of the accuracy of a company's
or government's financial statements and records.
A statutory audit is intended to determine if an organization delivers an
honest and accurate representation of its financial position by evaluating
information, such as bank balances, financial transactions, and accounting records.
Firms that are subject to audits include public companies, banks, brokerage and
investment firms, and insurance companies.
We at Vyom Tax Compliance provide Statutory Auditing Services to our clients.
(B) Tax Audit
A tax audit is the process of verification and inspection of the accounts
of a taxpayer to confirm their adherence to the provisions of the Income Tax law.
Section 44AB of the Income Tax Act, 1961 deals with the Audit of the Accounts of a certain
category of persons carrying on a business or engaged in a profession.
The taxpayers listed under this section compulsorily have to get their accounts audited by a
Chartered Accountant. The Chartered Accountant will check and verify that these accounts comply
with the various provisions of the Income Tax law.
Therefore, the audit required as per Section 44AB of the Income Tax Act, 1961 is called a tax audit.
Any person who is required to get a tax audit
would be required to furnish the following for tax
audit while filing an income tax return:
Form 3CA & 3CB-3CD
Form 3CA & 3CB-Audit Forms
Form 3CA–Audit
Form 3CB-Audit Forms
Form 3CD–Detailed Statement of Particulars
Form 3CE-Audit report in case of non-residents and foreign companies
If any taxpayer who is required to get the tax audit done but fails to do so, the least of the following may be levied as a penalty:
However, if there is a reasonable cause of such failure, no penalty shall be levied under section 271B.
(C) Fixed Assets Management/ Physical Verification of Goods
Physical verification can be termed as a process of comparing an
organization's official list of assets with the actual assets. Most
of the assets that auditors verify are fixed assets, cash and inventories.
With this examination, auditors personally authenticates that the assets
listed on an entity's financial statements actually exist.The auditor might
also use this procedure to confirm the condition of those assets.
The physical verification is normally performed at the year ended or at the end
of the report date of financial statements. The full count is performed by
the client’s delegate staff and observers by auditors.
Have questions for us? Send your questions by filling up the query form.
Disclaimer:
The information on this website is for general informational purposes only. Vyom Tax Compliance Private Limited makes no representation or warranty, express or implied. Your use of the site is solely at your own risk. This site may contain links to third party content, which we do not warrant, endorse, or assume liability for.