Reasons Why You Should Hire an Independent Tax Auditor

Tax auditing is a vital part of every business financial department. Auditing has been known as something that is meant to be kept within the company. Hiring an external auditor to do such a crucial job may seem too much but it comes with benefits.

Firstly, let us lay the fact bare that having an external auditor work for your company is not bad. In fact, it is one of the best financial decisions you will make in your company.  In this article, we will discuss the importance of having an independent tax auditor and how to go about it.

What is an Independent External Tax Auditor and What Do They Do?

For newbies to this subject of tax auditing. Let's take this a bit backward for you to catch up. A tax auditor is a financial expert who analyzes taxes and financial data of a company or organization, to check if they are in line with applicable financial laws and regulations.

An independent external tax auditor is a professional who performs audits of financial records and statements of an organization's tax activities. External tax auditors are typically external to the organization being audited and are appointed to provide an objective and impartial assessment of the organization's tax compliance and reporting. Most of the time these tax auditors can be hired remotely. So, they may also be called; external remote tax auditors. now, let's tweak this definition a bit for you to understand further;

A remote external tax auditor, also known as a virtual tax auditor or a remote tax examiner, is a tax professional who performs tax audits or examinations remotely, without physically being present at the location of the taxpayer being audited. Remote tax auditors typically use digital tools and technology to access and review electronic records, documents, and financial information to assess an organization's tax compliance. 

Do you understand? If you don't, contact us as we will be willing to explain further.

Going forward, below are some key responsibilities of an external tax auditor:

Evaluating an Organization's Compliance with Tax Laws and Regulations

The remote external tax auditor assesses the taxpayer's compliance with tax laws and regulations. This may involve interpreting complex tax rules, regulations, and guidance to assist the taxpayer's compliance.

Analyzing Financial Data and Conducting Tax Research

The external tax auditor analyzes financial data provided by the taxpayer, including income, expenses, deductions, credits, and other relevant information. They conduct tax research to determine the correct application of tax laws and regulations. 

Assist Businesses in Tax Filing

External tax auditors may be allowed to help a company in filing their tax returns. Although not every company may want a remote tax auditor to do this, it is not entirely ruled out.

Prepare a Tax Audit Report

This is a crucial part of being a tax auditor. You must examine the tax records of a business and ensure all taxes have been properly filed and reported. After that, it is the duty of the tax auditor to make an audit report based on his or her findings.

Benefits of Hiring an External Auditor

From the roles of an external tax auditor explained in the previous section, we can conclude that In every company, having a tax auditor is very essential in the financial department. Though due to the sensitivity of the task, some companies prefer to have an internal auditor. However, having an independent external auditor may prove to be a better idea, and here are some reasons why:

• An external auditor is sincere
• Gives more credibility to the company
• Broader experience
• Better efficiency

An External Auditor Is Unbiased

There is no emotional attachment to a company when an external auditor is involved. Because of this reason, a better audit will be carried out.

An external auditor can discover the problems in a company and also proffer solutions without any bias. This is because there is nobody the auditor is trying to win over. 

External Auditors Gives More Credibility to the Company

A company's credibility can be increased by hiring an external tax auditor for a more detailed audit. There is a sense of transparency that comes with knowing an audit was done by an independent tax auditor. The company would be seen as truthful and it will make them more trustworthy because there was no affiliation with the auditor.

Broader Experience

An internal auditor may be good and reliable, but an external auditor has something more than that. External auditors have worked for various companies and this gives them a vast knowledge of experience. 

The experience possessed by external auditors can help them work more efficiently and produce an accurate audit in less time. Because they have worked for companies in different situations, they can act better and produce a more reliable result than an external auditor.

Better Efficiency

Every worker would love to have a lesser workload. Having auditing done externally will help increase the efficiency of the financial department. The department can then focus on other important work to do and leave the auditing agency to do the job. This could also ease the business operations and processes, which would greatly help with overall business performance.

Criteria for Hiring an External Auditor

By now, you must have seen the benefits that come with hiring an external auditor. However, there are some factors to consider when it comes to choosing the right remote auditor.

The below factors will help you decide if an audit company or independent auditor fits your needs.

• Working Experience
• Competence
• License
• Independence
• Budget

Working Experience

Hiring an experienced auditor is necessary because it means the auditor is familiar with the industry and is bound to make fewer or no mistakes.

An experienced auditor will most likely provide other important services than just filling out a form. An expert auditor will help your company get more accurate reports and follow tax regulations. Additionally, the internal auditor in your company can also learn from the experience of the external auditor.

Competence

Any good auditor will be familiar with industry-standard technologies and how to use them to gather relevant information needed for your audit, mostly when you are close to the deadline.

By being competent, the auditor will ensure important insights are not missed. A competent auditor is always up to date with the latest technologies used to pull useful data that will be analyzed.

License

By law, any auditing firm or individual your company hires must be licensed by the government before they can attend to clients. You should ensure to check for an auditors license before handing over your company's audit task to such a person or company.

Without conducting due diligence, you may end up hiring an illegal auditing firm and it can lead you to many legal battles.

Independence

When hiring an auditor, they should have no relationship with your company. This is to avoid a biased audit. An auditor who has no business with your company will deliver an unbiased result.

Having an auditor that is not independent can be dangerous in the future especially if the audit result is inaccurate. Audit inaccuracies have legal effects and should be avoided by all means.

Budget

Money is not easy to come by, so it should not be spent carelessly. Before hiring an auditor, you should be certain of getting exactly what you paid for.

Having a budget means you cannot hire any auditor that charges more than you budgeted. Some audit firms and auditors have a high price, even though they may offer better auditing services.

Lastly, with all that has been said, making a budget will save you some time by avoiding auditors that charge quite higher than what you can afford.

Hire an External Tax Auditor

In today's complex business environment, ensuring tax compliance is critical for companies to avoid potential legal, financial, and reputational risks. FirmEU stands out as a leading choice for companies seeking a reliable, independent, and efficient external tax auditor. With our team of experienced tax professionals, comprehensive audit approach, customized solutions, and technology-driven processes, we are well-equipped to provide a thorough assessment of your company's tax compliance.

At FirmEU, we take pride in our expertise in taxation, upholding the highest standards of independence, objectivity, compliance, and ethical practices. We understand that every company is unique, and we tailor our audit procedures to suit your specific needs. Our focus is on building long-term relationships with our clients and developing a deep understanding of your company's operations and compliance requirements. This enables us to provide personalized and proactive tax advice and recommendations, helping your company optimize its tax position. Contact us today.

Conclusion

In every business that wants to be taken seriously, an auditor is a must. While hiring an external auditor for your company, it is important to emphasize staying within your legal limits. Avoid seeking shortcuts to stay away from legal consequences.

You should always make sure an auditor has passed all the needed criteria before hiring such a person to handle your business audit. The audits performed should always be accurate and in-depth, and transparent.