What is inspection?
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What Does inspection Mean
Audit is the action and effect of auditing . The verb indicates the control and criticism of the actions or works of someone, or the fulfillment of the office of prosecutor (the person who investigates and reveals foreign operations or the subject who represents and exercises the public prosecutor in court).
The audit consists of examining an activity to see if it complies with current regulations . In the private sector , the inspection can be decreed by the State (to check if a company complies with the law ) or internally by the companies themselves (to control the balance sheets, the stock and destination of the goods, etc.).
For example: in the face of a complaint against a company that supposedly does not deliver invoices for its sales, a state agency decides to initiate the audit of the firm to verify that the payment of taxes is being met. If the analysis of its activity detects that the company, indeed, failed to deliver invoices, the State may act with some type of penalty. On the other hand, if the audit shows that the company does comply with the law, the complaint is dismissed.
To corroborate that each taxpayer pays the amount of their taxes correctly and in full, the examination must be organized into a series of well-defined tasks, which are divided into groups. On the one hand, there are massive processes , those plans aimed at analyzing the activities of a large number of people, for which computer networks and a structure based on effectiveness and efficiency are used.
These plans are carried out nationally and therefore study hundreds of thousands of cases monthly, looking for inconsistencies in payments and taxpayers' tax returns. It is worth mentioning that to this day there is still a moderate percentage of people who submit their statements on paper, which slows down the process.
Carrying out a control over such a volume of activities differs substantially from the examination of a particular case; its greatest complexity does not lie in the quantity, but rather the need to make the processes more complex in order to complete them in less time. Therefore, instead of checking documents one by one, as would be possible when auditing a store, advanced functions are used to help detect inconsistent data.
On the other hand, there are selective processes , that is, plans that focus on well-defined activities or groups of taxpayers, generally for having failed to comply with their tax obligation in a very evident way. It is a more flexible structure, since it varies according to the objective sought in each case; As is to be expected, not so many follow-ups of this type can be carried out per year, since they entail the physical displacement of personnel and their full attention to each particular operation.
When illegal activities that generate income based on tax evasion are detected through the examination , they proceed to pursue tax fraud , a plan that aims to reduce the financial and economic capacity of evaders to get them to cease their operations, the which are economically and socially damaging to their country.
In the public sector , auditing implies monitoring the activities of the State to confirm that they comply with the principles of legality and efficiency. Contracts established by the public administration and the use of state assets are among the factors that are usually subject to control.
The oversight function should not be left in the hands of the government , since control has to be carried out over the activities carried out by it.