What Happens During Desk Audit for Corporate Income Tax
The notification regarding the results of the desk audit is a reason to verify the calculation of corporate income tax and the related accounting data. Receiving such a document does not, by itself, explain where the discrepancy arose; the basis and required actions should be sought in the text of the notification and the materials available to the taxpayer.
It is better to start the work not with adjusting the reporting but with accurately defining the subject of the question. It is important to establish which period the notification refers to, which indicators are mentioned in it, and on what data the possible inconsistency was identified. This helps avoid changing correct information and focus on a specific operation or line of calculation.
Main Reasons to Check
The input data does not provide a closed list of reasons for notifications. In practice, when conducting an internal audit of the corporate income tax calculation, it is advisable to look for logical and accounting discrepancies that could affect the final indicators. In particular, it is useful to check:
- whether the income amounts correspond to the data of accounting and tax records;
- whether the operations are reflected consistently in registers, primary documents, and reports;
- whether there are documents confirming the accounted expenses;
- whether the operations are correctly attributed to the relevant reporting period;
- whether there are any arithmetic errors, omissions, or duplicate reflections of amounts;
- whether the related indicators agree within the calculation and its appendices.
Manual adjustments, non-standard operations, and documents received after the closing of the period require special attention. If accounting is conducted in multiple systems or divisions, asynchronous data updates may cause discrepancies. However, a final conclusion should only be made after comparing this information with the content of the specific notification.
Who It Concerns and How to Organize the Audit
This material is relevant for organizations calculating corporate income tax, as well as for accountants, tax specialists, and managers responsible for the accuracy of reporting. Even if one employee is preparing the response, colleagues who have primary documents, contracts, and explanations regarding business operations may be needed for the audit.
It is convenient to appoint a responsible person and gather a complete set of materials. This may include the notification itself, relevant tax reporting, accounting registers, turnover and balance sheets, contracts, acts, invoices, payment documents, and previously submitted adjustments. The composition of the set depends on the question specified in the notification.
Do not correct the reporting just to match the indicators. First, it is necessary to determine whether an error has indeed occurred. If the organization's data is correct, a clear explanation and supporting documents related to the identified discrepancy will need to be prepared.
What to Do After Receiving the Notification
First, carefully read the document and write down all mentioned periods, amounts, forms, and operations. Then, save it along with the date of receipt and check what actions and deadlines are explicitly stated in the notification itself. Specific deadlines are not provided in the input data, so one should rely on the received document and applicable official clarifications.
Next, you can proceed in the following order:
1. Compare the indicators in the notification with the submitted reporting.
2. Check the breakdown of disputed amounts according to accounting registers.
3. Find primary documents and explain the economic substance of the operations.
4. Determine whether there is a real error or if the discrepancy can be justified.
5. If an error is confirmed, prepare the necessary corrections.
6. If the data is correct, formulate a coherent explanation and attach confirmations if required.
7. Before sending, double-check the amounts, periods, and completeness of the materials.
It is useful to structure the response so that the auditor can trace the path from the reporting indicator to specific documents. A table with the disputed amount, accounting data, supporting document, and a brief explanation often makes the position clearer. A copy of the sent response and confirmation of its dispatch should be kept in the organization's internal archive.
Frequently Asked Questions
Is it necessary to submit corrected reporting immediately? — No, first it is necessary to check whether the notification indeed indicates an error. The decision to make corrections is made after reconciling the reporting, accounting, and documents.
What documents should be prepared for the audit? — Start with the notification, reporting for the specified period, accounting registers, and primary documents for disputed operations. The exact set depends on the content of the received document.
What to do if the organization's indicators are correct? — Prepare a logical explanation, show the origin of the amount, and gather supporting documents. The response should directly relate to the discrepancy indicated in the notification.
Where to check the response deadline? — Check the notification itself and the official channels through which it was received. The specific deadline is not indicated in the available data.
Sources
Desk Audit for Corporate Income Tax: Main Reasons for Notifications