What is the meaning of Forensic Tax Audit?

What is the meaning of Forensic Tax Audit?

It is forensic audit not forensic tax audit. A forensic audit is an examination of an organization's or individual's economic affairs, resulting in a report designed especially for use in a court of law. A forensic audit is similar to the tax audits performed by the IRS; both strive to establish a comprehensive picture of an entity's finances (assets, liabilities, total income, cash flow). However, while a tax audit is intended to determine the true size of one's tax liability, a forensic audit can have several goals, including mapping cash flow/cash transactions, identifying accounting errors and enumerating total asset.

It can be conducted in order to prosecute a party for fraud. It also cover the cases of disputes disputes related to a bankruptcy, business closures.Forensic accounting utilizes accounting, auditing and investigative skills to conduct an examination into a company'sfinancial statements.The investigation process follows a similar path as a regular audit of financial statements. The steps can include planning, review and a report


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