(Tax Update) Red Flag In IRB Desk/Tax Audit - Audit Adjustment

When I says I don't like to deal with audit adjustments, I have a few reasons.

The IRB will checks any companies tax under the current tax regime. During an desk/tax audit, which is a detailed examination, the IRB officers will ask for a lot of different documents to check everything is correct.

One specific thing they ask for is auditor audit adjustment which the tax officer will ask a copy of audit adjustment.

An audit adjustment is basically a change made to the financial records to correct them or to show more accurately what a company has earned and spent.

This might sound simple, but it can get quite complicated and stressful. If the adjustment shows that the company made less profit than it initially said, this is a big deal.

It's like waving a red flag to the IRB officers, signaling there might be a problem. IRB might think the company is trying to pay less tax by showing less profit.

Imagine the auditor pass audit adjustment
Dr Purchase RM100,000
Cr Director account RM100,000
Being unrecorded purchase now adjusted

How to explain to IRB?

This situation can lead to more questions, more documents to provide, and a longer tax audit process. It's not just about the extra work. More stress

PS : Authored by Mr Koh Teck Peng, the Group Principal, on his personal LinkedIn post https://bit.ly/49iQrmr

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