Internal auditor's obligations in relation to tax

Internal Auditor’s obligation in relation to tax

Be it value added tax or corporate tax; an internal auditor needs to have knowledge of the essentials of tax laws to which the company is subject to.

During the preparation of the annual internal audit plan, auditors need to allocate sufficient time to verify the company’s adherence to local tax regulations, it is both risky and costly not adhere to tax laws, not only due to the hefty fines that most tax laws impose on violations but because non-adherence can cost companies much more than money.

We have witnessed over the years several cases of business closures due to non-adherence to tax laws, the truth is that: the easiest way to avoid troubles is to stay straight; calculate your tax properly, pay on time, be aware of all tax laws updates and above all be transparent with the tax department in case of ambiguous cases or mistakes.

The points mentioned in the previous paragraph should be part of each annual audit plan as the risk involved is permanent.

Reporting on compliance with tax laws demonstrates more credibility to the internal auditor and shows the depth of his involvement and commitment to professional standards.