Why Internal Audit, Statutory Audit and Tax Audit is Important
Auditing is a systemic and independent review and analysis of financial statements, management accounts, management reports, accounting records, revenue and expenses reports, among others. The result of the reviewed financial records should be reported to the shareholders and the various stakeholders. Working with a reputable audit firm in Singapore is vital if you want your audited financial statements to have credibility.
Auditing is classified into diverse categories, levels and objectives and the execution of the auditing task should be based on the local and international standards set by the responsible body. The process of auditing begins by choosing a reputable audit firm that has the required level of expertise, and professionals needed to undertake to audit. Here are some of the key classes of auditing that one should be aware of and their importance;
Internal Audit
Internal auditors are like the company’s watchdog that is tasked with examining the company’s financial records and also reviewing the operational procedures independent of the management. The internal audit focuses more on the risk management functions of the company, regulatory compliance, security and analysis of the controls put in place across different departments.
In order to undertake internal auditing, companies should consider engaging professional audit firms such as onestop-ca.com as they have a team of professional auditors with the required level of expertise. The internal auditors are expected to look out for the discrepancies in the operational processes and how the processes are designed to work.
Internal audit helps in ensuring operational efficiency, financial reliability and also safeguards assets. Working with a qualified audit firm for internal audit services helps in ensuring accuracy within the processes.
Statutory Audit
The statutory audit entails an official assessment of financial records of a company. Statutory audit is a requirement by law that should be adhered to by companies that are incorporated in Singapore. Audit laws in Singapore are enforced by the Accounting and Corporate Regulatory Authority (ACRA) and all the companies incorporated in Singapore apart from those classified as small companies are required by law to undergo a statutory audit.
The scope of undertaking statutory audit is defined by the relevant government agencies. When a company engages in audit, there are a number of factors that get analyzed, and that’s why it’s important that the company choose to engage a reputable audit firm in Singapore. The financial records that get analyzed include profit and loss statements, income statements, cash flow statements and others.
Each of the required financial records should be analyzed by qualified auditors and the audited report submitted to the company accordingly. In case of violations, there are penalties that companies are required to pay and that vary depending on the type of violation.
Tax Audit
Tax audit entails inspection of the tax reports as submitted by the companies or other taxpayers. Tax audit is normally undertaken by the Inland Revenue Authority of Singapore (IRAS), and it’s normally done when the company in question is suspected of tax evasion. The process of a tax audit can be draining psychologically to the parties involved due to the heavy penalties that it attracts.
