When we write “Audit” or “Tax Audit” in Google it gives about 3,05,00,000 results in 0.33 seconds all the same defining audit as “Systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose (source : Wikipedia) . We as student read it, learn it and when it comes to the practical application we do the same. The real meaning is somewhat different which can’t be learnt or crammed but something which can only be experienced or can be taken into habit.
When the word “tax audit” comes to one’s mind, we start defining it by the procedures we go through while conducting a tax audit i.e. checking opening balances, bank statements, vouching, verifications, ratio analysis etc.
But while following all this we miss out the most important stuff i.e. critical examination of each and every aspect of the final statements. As explained in these few lines “Anatomizing the values and numbers or finding various ratios and doing all the numerical work is not an audit actually what we are seeking doesn’t lies in these numbers , but what we have to do is to analyse the financial statement from each every point of view i.e. taxation, excise , labour laws , ROC etc. ”. Because we are not going to prepare a separate financial statement for every concerned person.
It is something like we are required to click a family photograph but we start taking snaps of each individual separately. Since it is one time and one document affair thus it is to be prepared, checked, Audited, and finalised with single consolidated effort to simultaneously suffice the requirement each party concerned.
There are some lines from the book “an autobiography of a yogi” to which I can relate the conversation of that day “God is simple everything else is complex. Do not seek absolute values in the relative world of nature”.
I know that both the lines seems to be different and do not relate to each other but when we think about quintessence of the lines we will know that both are initially same.
A chartered accountant does the work of dual responsibility, first is to critically examine the final statements and the second one is more important which is to give advisory to the client regarding the financial statements and other critical points which may affect the financial soundness of the client.
I can conclude the whole responsibility of a Chartered Accountant with following lines “ Our Objective is to maximise the capitalisation without entailing, interluding and overluding transactions using the funds at appropriate place with relevant cost to keep minimum tax liabilities and keeping the least transactions possible.”
Thanks for reading, I hope you like my perspective towards tax audit.