Don’t Overlook the Taxing Issue: Why Tax Internal Audits are Essential (and How to Partner with Tax for Success).

In the ever-complex world of corporate tax compliance, internal audit teams can’t afford to miss a trick. While financial audits…

In the ever-complex world of corporate tax compliance, internal audit teams can’t afford to miss a trick. While financial audits are crucial, a comprehensive internal audit program should also encompass a dedicated focus on tax practices. This blog post explores the importance of tax internal audits and the power of collaboration between internal audit and tax teams.

Why Tax Internal Audits Matter

  • Mitigating Tax Risks: Businesses face an ever-changing tax landscape, with new regulations and interpretations emerging constantly. Tax internal audits proactively identify potential tax exposures and areas for improvement, minimizing the risk of penalties and reputational damage.
  • Ensuring Tax Efficiency: A tax internal audit goes beyond just compliance. It evaluates the effectiveness of tax strategies and assesses opportunities for optimization. This can lead to significant cost savings for the organization.
  • Strengthening Internal Controls: Tax internal audits assess the effectiveness of internal controls over tax processes, such as tax calculations, provision recording, and documentation. Strong controls minimize errors and ensure accurate tax reporting.
  • Building Trust and Transparency: Regular tax internal audits demonstrate a commitment to tax transparency and responsible financial management. This fosters trust with stakeholders, including regulators and investors.

Partnering for Success: Internal Audit and Tax Collaboration

Collaboration between internal audit and tax teams is essential for maximizing the effectiveness of tax internal audits. Here’s how to achieve a successful partnership:

  • Joint Planning and Scoping: Involve tax team members in the planning and scoping of the tax internal audit. Their expertise is invaluable in identifying key risk areas and ensuring the audit aligns with current tax regulations.
  • Information Sharing: Foster open communication and information sharing between both teams. Provide the internal audit team with access to relevant tax data and documentation to facilitate a thorough and efficient audit.
  • Mutually Beneficial Outcomes: Frame the tax internal audit as a collaborative effort focused on improving tax compliance and efficiency. Highlight the benefits to both teams, such as reduced tax risk and improved internal controls.
  • Communication with Management: Develop a joint communication plan to report the findings of the tax internal audit to management and the audit committee. This ensures clear and transparent communication of tax risks and recommendations.

We’re here to help.

We have a range of tax tools and templates which can help.

ERFIN01 – Audit Work Program – Tax Risk Management (General)

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ERFIN02 – Audit Work Program – Tax Training and Awareness (General)

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ERFIN03 – Audit Work Program – Transfer Pricing (General)

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By integrating tax internal audits into your overall strategy and fostering strong collaboration with the tax team, you can create a robust tax compliance framework and position your organization for long-term tax efficiency and reduced risk.


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