What Do You Need to Know About Individual Audits By IRAS?

An audit is nothing but inspection of a company’s income financial report to make sure that the information provided in the tax return is accurate. When it comes to the audits, they are conducted for assessing the risk. One important thing that you need to know here is getting selected for an audit doesn’t mean that you made a mistake.

What is the purpose of IRA’s audit?

Ensures that your company’s tax returns are compliant with tax laws.
Educate your company on its tax requirements and how to meet them.
To determine whether tax laws and processes can be simplified or not.

What is the importance of tax audit? If the IRAS officers find any errors, the penalty will be imposed on you. Hence, it is extremely important for you to keep all your financial reports error-free. If you are looking for IRAS audit assistance, you could take the help of a professional tax audit firm like JL Accounts Management.

This company has helped many businesses in their IRAS audit management, and all of them are pretty satisfied with their services. Their team members are experts in providing bookkeeping services and preparation of accounts on a monthly and yearly basis.

What you should do during an audit?

Allow the tax officers to conduct interviews with your staff.
You must provide complete access to your documents and records. Hence, make sure that you keep all your documents and records ready.
Ensure that you quickly respond to the officers’ requests by providing the information accurately and completely.
Allot a room or some working area available for the auditors to conduct records and book examinations.

How a business will be notified about the IRAS audit?

IRAS will notify you about the audit through a phone call or email or letter. IRA’s team will also clearly mention the audit timings, date, and the type of documents that will be examined, whether they give you a call or send a text message. Continue reading to know what to expect during an audit.

Initial Interview

Tax officers who have IRAS-issued authority cards generally do field visit. Most of the IRAS officers start with a field visit for obtaining some basic information like the nature and size of your business, organizational structure, and bookkeeping and accounting procedures.

Examining Documents

The following are some examples of documents or records which most of the IRAS officers examine.

They may ask about the bank statements of your personal accounts as well as business accounts.
They might also ask you to show the other records that show transactions related to your business.
Invoices, receipts, and vouchers received or issued from suppliers or customers. These documents are generally referred to as source documents.
Both electronic and manual accounting records. You must keep these accounting records available on the day of the audit.

In general, 2 to 4 tax auditors check your accounting books. They may retain some of the accounting books and records for further review.

Length of a Field Visit

This generally depends on several factors like co-operation levels, record keeping, etc. In some cases, the audit might last only for a few hours and, in some cases, it may take around a day.

Revisits

If you fail to provide any requested information or records related to your business, the auditors might revisit your workplace. They will keep you informed about the date of their visit.

Collecting information from third parties

If the auditors feel that the data provided by you is inappropriate or insufficient, they might take help of third parties for collecting information related to your business.

The outcome of the audit

The IRAS team will normally share the audit’s findings in writing. They will provide you with suggestions on how to make your business more comply with tax laws. They will also discuss the issues if they find any during their audit with you.

In order to ensure that you avoid making mistakes and to improve your business compliance with tax laws, hire a professional with sound knowledge of tax laws. You must also practice record keeping in your business. Track all your business records every week. Last but not the least, hire a good accountant.