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Statuatory
Tax Audit is an independent audit by a chartered accountant in full-time practice concerning the matters related to Taxation only and a report confirming that there is no concealment of income by the taxpayer and that there is no non-payment of tax liability and the same has been paid on due dates. The tax audit is a statutory obligation on the part of the taxpayer and is applicable on all cases where the turnover or the gross receipts during the previous year is more than the limit prescribed under section 44AB for the respective assessment year. The due date for filing the tax audit report is 30th September of the assessment year. In case the audit report is not submitted within its due date then the taxpayer is required to pay a penalty of an amount equal to 1.5% of the gross receipts/turnover, however, subject to a maximum fine of Rs. 1.5 lac.
FORM NO. 3CA : The tax audit report needs to be prepared as per prescribed form 3CA in case the assessee is also required to get its books of accounts audited under any other law. For instance in cases of the company, every company is required to get the books audited under the companies act, 2013.
FORM NO. 3CB: An case the assessee /taxpayer is not required to get its books of account audited under any law then the tax audit report need to be prepared as per prescribed form 3CB. For instance, in case of a salaried individual or firms, if their income is more than Rs. 1 crore.
FORM NO. 3CD: Form 3CD is an annexure to form 3CA or 3CB as the case may be. The tax auditor is required to fill particulars of the taxpayer for which tax audit was conducted. The form 3CD is in the form of an information memorandum .
Document Required
- Name, PAN and address of the depositors;
- For minors, guardian details
- Particulars of the nominee;
- Date and amount of each deposit
- Deposit receipt number
- Interest rate and Duration of such deposit
- Repayable date
- The due date for interest payment
- Details with respect to deposit insurance
- Details of charge/ security created
- Other details with respect to deposit.
Company Audit
A company audit is an internal or external inspection of the company’s finances. It is an independent inspection of the finances only. The audit is conducted for a company irrespective of whether it’s profit-oriented or not. Whether it’s a big enterprise or a small company, the legal form of the company does not contribute to whether a company is subjected to an audit. The company audit is done for all companies. The audit ensures that the company keeps sufficient records required by the law. Auditors consider the propositions, obtain evidence for the same, and then generate an audit report for a company.
1. The investors can find out about the exact financial status of the company, which helps them decide whether or not to invest in that company.
2. When the stakeholders get authentic financial information about the company, they can buy more stocks, hold them, or sell them accordingly.
3. Banks can know whatever it’s suitable to grant loans or debts to that company based on the audit report of that company.
Document Required
- Reports on the Payroll
- List of All the Bank Accounts Used
- List and Evidence of all the Transactions
- The General Ledger
- Trial Balance of the Company
- Copies of all legal documents
- Confirmations
- Loan documents
Internal Audit
The internal Audit is conducted inside the company. The auditors in an internal audit are employees of the same company. They are not much focused on the financial statements of the company. They emphasise corporate governance and how companies’ operations are conducted. The audit report of a company from an internal Audit is not made public. The company’s executives and the audit committee look at this audit report. They can get an overview of how the organisation performs across various areas. Internal controls, risk management, and compliance are the factors that are emphasised in an internal company audit.
Testing stage : The testing stage is the third stage, in which the accuracy of the various financial statements is determined.
Reporting stage : The testing stage is followed by the reporting stage, where the judgement on the financial accuracy is expressed.
Document Required
- Individual KYC- providing details regarding name, PAN card, AADHAAR card.
- business description
- copy of last audited financial statement and type of engagement.
External Audit
In external audits, people from outside the organisation are hired to form an opinion about the accuracy of an organisation’s financial reports. For the companies listed publicly, the audit report of the company is made available to the public, stakeholders, and investors. In the case of public companies, the results of an external audit are reported to the public. The audit norms are followed. Large companies hire big firms to carry out audits for their finances. External audits provide a fresh perspective that an internal audit can sometimes lack.
Tax Audit
There are various kinds of audits being conducted under different laws such as company audit/statutory audit conducted under company law provisions, cost audit, stock audit etc. Similarly, income tax law also mandates an audit called ‘Tax Audit’. As the name itself suggests, tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint. It makes the process of income computation for filing of return of income easier.
Document Required
- A cash book, meticulously records all daily cash receipts and expenditures, along with the closing cash balance at the end of a designated period, not surpassing one month.
- A ledger, diligently tracking all debit and credit transactions.
- A journal book, specifically when following the mercantile system of accounting.
- Original invoices sent to the individual and receipts for expenses incurred by the individual. However, if no bills or receipts are issued, and the expenses incurred do not exceed Rs 50, the taxpayer is only obligated to maintain signed payment vouchers.
- Duplicate copies of bills issued by the individual, whether machine-numbered or sequentially numbered, as well as duplicate copies or counterfoils of receipts issued by the individual, provided these bills or receipts amount to Rs 25,000 or more.
Other Audit
The Companies (Cost Records and Audit) Rules, 2014 prescribes that the following private limited companies must perform cost audit:
Private limited companies engaged in the production of goods or providing services listed in table 3(A) of the Companies (Cost Records and Audit) Rules and having:
An annual turnover in the previous financial year of Rs.50 crore or more from all its services or products
An aggregate turnover of the individual service or product of Rs.25 crore or more
