If your company in Singapore is chosen by the Inland Revenue Authority of Singapore (IRAS) for an audit, it does not mean your company has incurred an error. It simply means that the agency wants to understand your business and ensure that all inf ormation indicated on your tax return is accurate.
Objectives of an Audit
The primary objective of an audit by IRAS is to evaluate how accurate the details are on your property tax returns. The audits are initiated to determine the possibility of risk. While IRAS believes that most of Singapore businesses are compliant, there exists the possibility of mistakes for various reasons. The auditing program of IRAS aims to determine which companies have committed errors in filing their corporate tax returns and other substantial documents, raise awareness on the tax obligations of each company and how best to comply with them, and to recognize which law, policy, or process concerning taxation that need to be simplified or clarified.
What Can Your Business Expect During an Audit
During an audit, the authorized auditors expect minimal interruption in the business operations. There shall be field visits after the company is informed either via telephone call or e-mail about the audit visit. Included in the information are details such as the date and time of the visit, as well as the books and documents to prepare for examination. The company shall also be informed in which Year of Assessment the documents or books are to be audited.
During the initial and subsequent interviews, the company may authorize a tax representative to answer the queries. The tax officers carry with them their authority cards as issued by IRAS. Normally, the team is composed of three of four officers, and starts the auditing with an interview to acquire background information such as:
- The nature of the business or company and its size
- The operations of the business or the company
- The organizational structure of the company including the key management personnel and their respective functions
Procedures for bookkeeping and accounting, and procedures for internal control
How Does IRAS Conduct an Audit
There are cases in which, aside from the company’s tax representative, the tax officers may need to meet with the key personnel either to get more information or its confirmation.
Mostly, the types of records that authorized tax officers of IRAS will require you are:
- Accounting books and records including general ledgers, journals, external auditor’s audit adjustments
- Source documents
- Bank statements
- Minutes of meetings and supporting schedules in preparing tax returns
If the documents are prepared or kept in electronic format, the tax officers may ask the company to prepare the specific information before the actual day of audit visit.
During the audit, you are expected to allow the tax officers to full access to your records and premises, make an interview with your employees or agents or tenants, and be cooperative and truthful in your answers. The duration of the audit depends on the scope of audit, level of compliance and the standards used by the company in keeping their records. An audit may complete in one to three days.