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A revenue audit is a two-step process that compares the figures and details on a company’s tax returns with those in its business reports. Typically, auditors examine income returns from the past year, but they will also review previous years’ records if inconsistencies arise.
Most businesses, regardless of size, are subject to audits. Auditors may focus on various areas, including financial statements, compliance, tax records, or business operations. For instance, during a revenue audit, a company’s tax returns will be compared with its financial reports.
The revenue audit involves reviewing the tax return, inspecting the declaration of liability, and verifying compliance with stamp duty regulations, as well as ensuring the individual meets their obligations under tax and duty laws.
Additionally, the audit assesses the company’s liability by examining its books, records, and adherence to tax obligations. The auditor also calculates any unpaid taxes to ensure proper tax enforcement.
*NOTE: A single auditor can conduct the revenue audit, or if the organization is large, a team of revenue auditors may be assigned to the task.
For an auditor to assess the risk of significant inaccuracies in statements, it is essential to understand the requirements of the new revenue recognition standard. For a comprehensive overview of this process, please reach out to Litrix.
