Role Of Management Accountant in Tax Audit-Ideal individual for Auditing Accounts for direct tax collection.

Financial accounts has a singular goal of drawing profits out of all incomes by way of charging all expenses. Its classification is simply whether an item is a capital/revenue/deferred revenue .That is the crux of the financial statements is to match Income with expenditure to arrive at surplus or deficit.

Cost accounting is based on classification of expenditure into Direct/indirect its concern is not profit-centric since it believes that such simplistic assumption misleads the efficiency of segments/sub segments of the organization .The financial accounts can get the owners caught napping by building castles without foundation. Cost accounting is truly a test of efficiency of the going concern and the dimensions of cost accounting are ever evolving.Efficiency of the business reflects in the national performance indicators.
When we talk interms of Tax collection we talk in terms of allowances and disallowances of items occurring in the financial statements .The allowances and disallowances are to be framed scrupulously keeping in mind development and the impact of its spread .A well established cost data will reflect on the betterment of tax collection. Infact the tax authorities are concerned with actual cost under the particular head and also in some cases whether such heads of expenditure are fanciful decorator or factual. This only shows that tax authorities are at varience with financial accounting and its policies of classification of expenditure.A Management accountant is in a better position to interpret on Closing stock valuation which is an important component of profit valuation. A Management accountant again is in a better position to interpret Asset valuation its position in depreciation etc for linear method of valuation is not the goal of Tax authorities. A cost accountant is again in a better position to check the various allowances(investment) are being properly granted.
Tax revenue goes to the exchequer to finance development needs(socio-economic) of the economy.A tax payer is under obligation to pay for the rights he enjoyed to earn the revenue.The concept of egalitarianism is linked in levying taxes as well.
Basically the concept of cost is hidden in tax laws for allowance and disallowances of income and expenditure and this is where Taxman have to avail the services of Management accountant .