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Archives for Accounting

RELEVANE OF ACCOUNT AUDIT AND MULTIPLE TYPES OF AUDITS

audit

There are multiple purposes for auditing of any enterprise.  It is mandatory for all publicly listed companies to audit their financial statements, and subsequently make it available to the public.   Audited financial statements can be used for improving internal controls or for assessing the financial position or performance of an entity.  The elements of financial transparency which results out of audit help in establishing a good relationship with investors and the company.

While preparing for an audit, it’s important to set internal controls and policies that are monitored and reviewed by the internal audit team.  The auditing group which performs such audit collects substantial information relevant to the enterprise, and issues statement or opinion about the quality and integrity of the company’s operations and financial status.  During the statutory audit, the auditor has to review the processes and procedures by which the financial information was prepared.  That is, the auditor has to check if the preparation of the company’s financial reports is aligned with GAAP or other applicable reporting frameworks.  Statutory audits underscore the importance of financial reporting in corporate transparency.

There are multiple types of audit as elaborated below;

Financial – Financial audits typically look into the accounting controls present in the general ledger or sub-ledger systems.  Financial statement auditing is the focus of our external auditors.

Operational – Operational audits focus on the review and assessment of a business process.  The activities of the business process may result in a direct or indirect financial impact on the organization.  Internal Audit primarily focuses on operational audits but can extend the scope to include accounting procedures that can impact financial reporting.

Compliance – Compliance audits review the level of compliance with internal policies or external regulatory requirements.

Information Systems – Audits of Information Systems look at the overall infrastructure and network controls that relate to the security of the network and the systems.  Such audit includes technical operations, data center operations, project management procedures, and application controls.

Integrated Audits – Integrated audits look at controls that address financial, operational, compliance and information systems risks.  These audits are typically centered on a business cycle or a specific part of a process.

Auditors protect the public from investing in companies that use corrupt business practices or that attempt to defraud investors with false financial statements.  They also provide assurance to investors and creditors that company funds are handled appropriately.  By reviewing financial statements and digging into accounting records, auditors can determine if the financial statements and records accurately depict the company’s true financial profile.

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Haven’t Filed Taxes For Years? The IRS May File On Your Behalf.

Have you ever wondered what would happen if you didn’t file your tax return? Well … You basically lose your refund (if you pass the three year tax deadline date) which for some people can be a significant loss. Also, you put yourself at risk of having the Internal Revenue Service (IRS) file for you.

Don’t wait on the IRS to file your taxes on your behalf. Let IRS Audit Group file your taxes in full compliance with the IRS. We will collect all the information from tax authorities, review it with you and file your tax return.

According to the IRS, substitute for return (SFR) and delinquent return procedures were developed to deal with taxpayers who do not file required tax returns. They use this to assess the correct tax liability by either:

  1. Securing a valid voluntary tax return from the taxpayer (delinquent return), or
  2. If securing a return is not possible, computing tax, interest, and penalties based upon information submitted by payers, or based on other available information (SFR).

If the IRS files a return, it will be based on the information they have available through existing records and it is usually done automatically. The downfall to this is that whether you were married filing jointly, had dependents you could claim for that year or whether you had any deductions are not taken into consideration. You’d sacrifice any of the credits that could lower your taxes and may end up owing substantially more taxes based on the SFR than if you filed your own tax return.

This triggers the snowball effect: If you fail to pay the taxes the IRS has assessed against you, the IRS will begin collection proceedings to collect the taxes. Which could include issuing levies against your bank account or wages and filing liens against your property.

Don’t face the risk of increasing your tax liability – contact IRS Audit Group today to file your returns or for help on other tax issues. You still have options in cases like this and our team of tax professionals would be happy to guide you through them!

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