![income tax expense income tax expense](https://data.formsbank.com/pdf_docs_html/162/1623/162323/page_1_thumb_big.png)
This implies that proper disclosure regarding the Income Tax paid, in addition to the relevant amount paid needs to be incorporated in the financial statements.
#Income tax expense professional
However, the overall risk associated with the Income Tax Audit is high, and this risk can only be minimized if the auditors have professional skepticism as well as sufficient tax related knowledge to ensure that all the relevant criterion have been met by the accountants in the organization. See also What are Auditing Standards? What are they? This amount can be easily verified with the Income Tax certificate, and hence, this is a relatively easier part of the Income Tax Audit. This is because this amount is directly paid to the government, so verifying that amount does not tend to be a challenge for the auditors. Risk of Material Misstatement: The risk of Material Misstatement in Income Tax tends to below.
![income tax expense income tax expense](https://image1.slideserve.com/3506718/example-deferred-tax-liability-l.jpg)
As far as Income Tax audit is concerned, detection risk is also fairly high because of the fact that there are several different components involved that need to be considered in order to check for proper compliance. Detection Risk: Detection Risk simply refers to the inability of the audit system to point out any errors in the Income Tax.It is the calculation and subsequent computation of the inherent risk that tends to be increasingly important from the perspective of the auditor. The amount of income tax paid in itself does not really hold a high inherent risk. Therefore, in order to properly audit the income tax paid, auditors need to have a clear understanding of the industry dynamics, and the relevant tax rates that are applicable. There are several different industry-related rules that are applicable, in addition to the exemptions that the company has faced. This is predominantly because of the fact that the nature of tax in itself is fairly complex. Inherent Risk: The inherent risk associated with income tax is considerably higher.Subsequent explanation of these risks is given below. In addition, detection risks, and the risk of material misstatement is also significant and needs to be incorporated in the audit planning phase, as shown below: However, there is a high inherent risk associated with auditing income tax. It is directly contingent on the volume of profit that the company generates.
![income tax expense income tax expense](https://images.ctfassets.net/ifu905unnj2g/4YZTnk6Kv20hdUNgkt60lc/e4148669b50768645e2773364dc98891/Bench_Income_statement_template.png)
Income Tax tends to be subtracted at the latter part of the financial statement. Risks Associated with auditing Income Tax Hence, auditors need to have a clear understanding regarding income tax audits, so that they are able to save their clients from any penalties or restrictions in the coming future. In both the scenarios mentioned above, the auditors go through the same protocols, and therefore, the risks, audit assertions, as well as procedures for both are fairly similar.