i.        Tax Audit

Tax audit is an independent review of books of accounts of an entity by auditors required under the Income Tax Act, 1961.

Section 44AB of the Income Tax Act 1961 states that if the turnover or total annual income of a business exceeds a prescribed limit, its accounts must be audited by a chartered accountant. The CPA provides its findings and observations in the tax audit report on forms 3CA/3CB and 3CD.

A tax audit in India is a comprehensive examination of a taxpayer s financial records and tax returns to verify the accuracy of the tax liability declared and paid. The primary objective of a tax audit is to ensure that the taxpayer has paid the correct amount of taxes and to identify any discrepancies or non-compliance with tax laws.

What are objectives of income tax audit in India?

•    Ensure that accounting books are properly maintained and correct and have them certified by a chartered accountant.

•    Auditors identify discrepancies in the books of accounts so that they can be corrected and accurate accounts maintained.

•    Provide the required information, including deduction, depreciation, and legal compliance in the reporting format prescribed by the tax authority.

•    Ensure that tax returns are accurate and filed correctly in accordance with the Income Tax Act.

ii.        Statutory Audit

Along with the globalization and ever-increasing regulatory requirements, companies need to be dynamic and transparent in the business to create a trustworthy image in the minds of stakeholders.

What is meant by statutory audit?

A statutory audit, also called an external audit, is an audit mandated by a specific statute or law to ensure that an entity s financial statements give an accurate picture of its situation and its profitability. Statutory audits are governed by the Companies Act 2013 and the Companies (Auditors and Auditors) Rules 2014.

The scope of the statutory audit mainly depends upon the guidelines and regulations set by the government. The financial statements and the accounts of the organization are scrutinized to avoid discrepancies or any possible misrepresentation and ensure reliability.

Benefits of Statutory Audits for Your Business

Statutory audits are more than a compliance exercise; they re a strategic tool for growth. Here s how they benefit your business:

1.      Regulatory Compliance:

•    Avoid penalties and ensure adherence to legal requirements.

2.      Investor Confidence:

•    Build trust with investors through transparent financial reporting.

3.      Risk Mitigation:

•    Detect fraud, inefficiencies, and operational risks.

4.      Operational Insights:

•    Enhance financial controls and optimize processes.

Our Statutory Audit Methodologies

•    understanding the business of the entity and its environment

•    understanding of business cycles and business

•    identification of internal controls

•    controls risk assessment

•    detection risk assessment

•    application of analytical audit procedures

•    application of subtantive audit procedures

•    issuance of audit report

iii.        Internal Audit

Internal audit is a crucial function within an organization that provides an independent and objective assessment of the organization s financial and operational activities. Its main objective is to evaluate the reliability and efficiency of internal processes and to ensure that they comply with laws, regulations, and internal policies. The internal audit process is performed by internal auditors and is designed to identify opportunities for improvement, reduce risk, and add value to the organization.

Internal audit helps organizations build confidence with stakeholders. By demonstrating a commitment to good governance, transparency, and compliance, organizations can enhance their reputation and build trust with stakeholders. This, in turn, can have a positive impact on the organization s financial performance and long-term success.

Our internal audit services

Strategic Review of the Internal Audit Function

Some organizations have their own internal audit department and want us to review their internal audit function. In such cases, we understand and evaluate its operating procedures, methods, and capabilities vis a vis department s objectives to identify and implement better processes and control mechanisms.

Our outsourced internal audit service is aimed at providing a full-fledged service wherein we carry out the audit with our experienced auditors and domain experts. At the end of the audit, we provide you internal audit report with our recommendations and help you implement those recommendations.

Internal controls policies and procedures development

Business process optimization

Our auditors study your current business processes, compare them with the best practices, identify weaknesses and improvement opportunities, and devise a new set of business processes to achieve higher efficiencies.

Follow-up engagements

We do undertake follow-up engagements where we help you implement recommendations from the last internal audit report to ensure better compliance and operational efficiencies.

iv.        GST Audit

What is GST audit

The basic purpose of auditing under GST is to make sure that the ITC refunds availed and claimed, taxes paid, and the turnover is in line with the one claimed by the company. An audit under GST involves inspection of records, returns, and documents furnished by your firm. The GST audit is undertaken to evaluate whether the business is run in compliance with the GST guidelines and provisions.

GST audit procedure

Study of internal controls

Our auditors study the effectiveness of internal controls and internal checks established by the management to ensure GST compliance. A review of internal controls applicable to transactions like sales returns, sale on approval basis, and job work is also carried out for their completeness and actual implementation. Our GST auditors also study the adequacy of records maintained under GST and provide their recommendations.

Records verification

Our GST Auditors verify the GST registration certificate, classification of supplies and services under GST, reverse charge, purchase register, sales register, stock register, expense ledgers, monthly and quarterly returns, and other records maintained by the company as per the requirements of the law.

Cross verification of GSTR-3B to GSTR-1 AND 2A

We cross-check GSTR-3B with GSTR-1 and 2A to ensure that input tax credit has been properly claimed. We also check the arithmetical accuracy of figures and identify mismatch, if any. Based on our findings, we recommend management to make necessary changes.

Invoice verification

We check the outward invoices to ensure that the format of the invoice complies with the law. We then go on to check the arithmetical accuracy of the same and check if the tax rate is correctly charged considering the goods and services supplied.

We also check purchase invoices for their eligibility for input tax credit (ITC) and verify if the total of such ITC matches with the amount of credit claimed in the GST return.

ITC non-payment reversals

Our GST auditors check if the input tax credit is reversed if the invoice under review has remained unpaid for more than 180 days.

E-way bills compliance check

We check if the e-way bill is generated for each supply having value more than Rs. 50,000 and supplies made via motorised vehicles. They also check if the e-way bill matches the invoice.

Idustry-specific check

Some of the GST provisions apply to specific industries. Our GST auditors carry out further examination of the records if specific provisions are prescribed for your industry.

v.        Stock Audit

The stock audit is the process of verifying and validating the physical inventory of a company s stocks or inventory. It is done to ensure that the company s records match the actual physical stocks present in the warehouses, factories, and stores. The process helps companies detect discrepancies and prevent fraud, pilferage, and theft.

The purpose of a stock audit is to ensure that a company s physical inventory is accurately reflected in its financial records. The audit checks for discrepancies between the inventory records and the actual physical count of goods. This helps the company identify any issues with the inventory management system and improve the accuracy of the records.

The stock audit is typically carried out by an independent auditor who is not affiliated with the company. The auditor uses a variety of methods to count the stock, including manual counting, barcoding, and computerized systems. The auditor also examines the inventory records, invoices, and purchase orders to verify that they match the physical stock count.

Benefits of stock Audit Services

•    Better planning of future purchase by evaluating the stock movement and changes thereof within the products and services of the organization

•    Prevents pilferage and fraud by tallying of stock

•    Affirmation of management by floor employees by tallying of physical stock with stock books

•    Instant information of value of inventory

•    Cost reduction and bottom-line improvement

•    Can aid in bringing in third party opinion, especially for warehouses outside of company premises

•    Reduction in gaps of inventory management process

vi.        Fixed Assets Audit

Fixed assets audit is an important component of the audit process for any organization that owns significant property, plant, and equipment (PPE). Fixed assets include items such as buildings, vehicles, furniture, and machinery that are expected to provide economic benefits to the organization over a period of time. A fixed assets audit aims to verify the existence, ownership, valuation, and utilization of these assets.

The audit typically begins by identifying the fixed assets owned by the organization, including their location and condition. The auditor then assesses the policies and procedures used by the organization to manage its fixed assets and determines whether they are adequate and effective. A fixed assets audit helps to ensure that the organization s fixed assets are accurately valued, properly accounted for, and effectively managed to maximize their economic benefits to the organization.

vii.        Compliance Audit

Compliance auditing is an independent evaluation of an organization to ensure that it is following rules, regulations, and external laws or internal guidelines, controls, and policies and procedures. It also determines whether or not the company is conforming to an agreement. The agreement could be related to some funding by a government or other entity, grants etc. It is in the interest of the companies to carry out compliance auditing regularly to avoid future problems.

This audit also reviews compliance with HR, IT and security issues, quality management, etc. Depending upon the type of organization, different approaches are made. For example, if you are a financial institution, then compliance regarding personal data, disaster recovery, or information recovery is reviewed. If you want to have a compliance audit for medical facilities, then compliance requirements may need information regarding IT infrastructure, software applications, privacy, data storage, and protection.

Benefits of compliance audit

•    Compliance audit helps in complying with all the rules and regulations applicable to the company including, direct tax, indirect tax, companies act, FEMA, PF, ESIC, Gratuity, Bonus, STPI, Environmental laws, shop, and establishment, etc.

•    It ensures efficient record management when it comes to vouchers, returns, forms, challans, and supporting documents forming part of the legal documentation.

•    It ensures the accuracy and completeness of the legal documentation.

•    It streamlines the overall compliance management process by providing necessary procedures and guidelines.

Financial Audit

A financial statement audit is often performed once a year at the end of the accounting year, but sometimes it can be done every quarter. While conducting the audit, the auditor follows a set of standards to make sure that both local laws and international standards are met. The main purpose of financial audit services is to make sure that the financial statements are accurate, reliable, and complete. It also ensures the company's shareholders and investors about its financial status and performance.

Concurrent Audit Services

Concurrent audit or bank audit can be defined as a timely and systematic examination of the entity s financial transactions to ensure accuracy, authenticity, and compliance with relevant regulatory requirements. Since the volume of transactions is very high, it is done on a regular basis. As concurrent auditing is contemporaneous with the transactions occurring, the process becomes a bit complex.

Concurrent audit scope

The scope for conducting a concurrent audit of banks include

•    Review of internal controls to check if they are adequate, considering the nature and size of the business and pinpointing areas requiring more stringent controls.

•    Verification of KYC, AML, TDS documents as per RBI and Ministry of Finance guidelines

•    Substantive checking of high-risk areas like credit, regulatory compliance, revenue, non-performing assets, and forex.

•    Bringing into the light any violation of rules, regulations, and procedures or any hidden fraud happening in the company.

 

FORENSIC AUDIT

A forensic audit is a specialized form of audit service that focuses on investigating financial irregularities and potential fraud within an organization. Forensic auditors use investigative methods and forensic accounting methodology to look for signs of deliberate fraud, financial manipulation, or money laundering. The results of a forensic audit may be used as evidence in court proceedings, and the investigators may work with law enforcement or legal authorities.