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Understanding Tax Audits: Breaking Down 9 Different Types of Audits

Home - Business - Understanding Tax Audits: Breaking Down 9 Different Types of Audits

Table of Contents

To Start With 

If you are managing your business you surely have the idea how much the audit and accounting services are needed. Especially those who are the owners of small businesses have to mind the steps regarding audit because they do not have excessive money to spend as a penalty. Maybe there are many business ideas of taking audit services. 

But if you think deeply then you will surely find that this is beneficial for your company. If you are taking this type of service or not you just need a basic understanding of audit services. You should mention a regular Tax audit process to make your progress secure in the business field.

 

9 Common Audit Types that You Should Know About

We are quite sure that every business person has a little Idea of the tax and Different Types of Audit processes. As it is entirely related to the business aspect you need to know the types as well. So for those who maintain a rooted audit procedure, we are mentioning the most common 9 types of audit that will help you to gain a better knowledge of it.

1. Internal audit

As its name suggests this type of audit process is included within the business. In this procedure, the business owner can initiate the entire process to a professional person. Shareholders and board members of the company can handle this process accordingly. This process helps the company to obtain a certain amount of its budget and maintain its financial goal every year. The process may include different types of measures. The expert may monitor the overall process of budget and financial steps.

2. External audit

If you are imposing the responsibility of the audit process of your company to a third party then it is called external audit. Often businesses find their pair or potential partner while conducting this process. In this case, there is no need to take the accounting records regularly. The expert will conduct research on trendy situation of financial aspects before creating the report. In such a situation there is a better profession for a more accurate audit process. Most probably the reason is the expert is professional in such a case.

3. IRS tax audit

If you have already filed the company’s tax return documents and are not sure about the whole thing you can take this process. Here the text liabilities are cleared and you may know the record of everything you need to know. For example, if there is any option of overpaying or underpaying the tax you will find the proper situation. This process is particularly very helpful in small businesses and their tax return policy.

4. Financial audit

Among all types of audit services, you will find described very often. Whenever any company thinks about so how source of Financial Services then this process is a Priority. While you are conducting a financial audit then you have to research different things and look after the accuracy of different financial records. A professional can do this in a better manner as he has already all the research reports in hand. So if you are searching for a professional then ask him about the financial audit process first.

5. Operational audit

If you are aware of the process of internal Tax Audits then you will promptly understand the operation audit services. The expert will ask for all financial and accounting details from you at the first meeting. Then he will start the second phase of work. In this face he will analyze everything including your company is goal for future planning. Apart from that the employees and their salary everything will be researched. After having all this accurate Data Expert will find the actual situation and will prepare his report.

6. Compliance audit

In this process, a professional will examine all the business policies. Additionally, he will look after the internal and external standards of the business. This process is efficient in determining the employee factors. Apart from that this will ensure that the company is following all the legal regulations regarding audit.

7. Information system audit

An information system audit is especially good for companies that have a software-based workforce. Especially the IT companies follow this process. Company the software is involved in keeping all the data and analyzing everything. The expert will just ensure that the software is working accordingly and the financial report is perfect with its data. In such a situation there is also any to protect the system from hackers as well as the frauds in this field. This is also the responsibility of the professional in the sector of information system audit.

8. Payroll audit

We have experience that many companies can prepare the tax report properly. However, they are not able to manage the employee payments in an organized way. Payroll audit service is what they can take. This is also a part of the internal audit service because it looks after different methods within the company. This can be helpful to calculate the payroll of a particular employee and have an idea of the growth of salary in the future.

9. Pay audit

This is a process that is also imaging with the previous procedure. In this case, also you will be able to contact measurement about the payment of your employees. It will also determine the factors that can spot equal payments to different employees. Apart from that this will also help to calculate the fair level of salary for the employees.

Wrapping Up 

We do not doubt that every businessperson has some knowledge of the many types of audits and tax procedures. Since it has everything to do with business, you also need to be aware of the many kinds. But if you give it some serious thought, you will undoubtedly see how advantageous this is for your business. You only need to have a fundamental understanding of audit services, regardless of whether you are using this kind of service. Hopefully, this discussion will help you in this context.