Accounting Review Before Tax Inspection: Key Checklist for CFOs

In recent years, tax inspections and audits have been conducted by authorities with increasing depth and scrutiny. This not only raises the bar for compliance but also requires businesses to be well-prepared with a structured accounting and tax system.

For CFOs, a pre-inspection review is not merely about checking figures; it is a comprehensive assessment of the transparency, consistency, and reasonableness of the company’s entire financial operations. A well-prepared system not only helps minimize the risk of tax reassessments and penalties but also enhances the company’s credibility when working with tax authorities.

Below are the key areas CFOs should focus on during the review process.

1. Legal documentation – ensure completeness and consistency

Businesses should review all legal documents to avoid basic discrepancies that can easily become risks during tax inspections.

• Verify the validity of business registration certificates, company charter, appointment decisions, and sub-licenses; ensure no documents are expired or not updated
• Cross-check legal information (name, address, tax code, business lines) with tax records, invoices, and contracts to ensure consistency
• Review whether registered business lines align with actual recorded revenue, avoiding income generated outside the registered scope

2.  Accounting books – reflect the substance of transactions

The accounting system must ensure accuracy and clear traceability.

• Reconcile data between subsidiary ledgers and the general ledger, ensuring no discrepancies or missing entries
• Review the logic of key accounts such as cash, receivables/payables, revenue, and expenses to ensure they reflect the true nature of transactions
• Ensure revenue and expenses are recognized in the correct accounting period, avoiding timing mismatches used to adjust profits

3. Tax reconciliation and financial statements

This is an area where tax authorities often conduct in-depth analysis.

• Compare revenue, expenses, and profit figures between VAT returns, CIT returns, and financial statements; identify and explain any differences
• Review adjustments to taxable income, ensuring they are well-supported and properly documented
• Prepare supporting documentation for significant fluctuations by year, especially for periods with unusual changes

4. Invoices and supporting documents – a high-risk area

Invoices are among the most thoroughly reviewed items during tax inspections.

• Review input invoices for validity (information, tax code, content), ensuring they are directly related to business operations
• Verify non-cash payment requirements for high-value invoices, ensuring sufficient bank documentation is available
• Reconcile output invoices with contracts and acceptance minutes, ensuring correct issuance timing and actual transaction value

5. Commercial contracts – basis for transaction substantiation

Contracts should clearly reflect the nature and terms of transactions.

• Review key terms such as scope of work, contract value, payment schedule, and acceptance conditions for completeness and clarity
• Ensure appendices, acceptance minutes, and liquidation records are fully maintained to support explanations
• Review related-party or unusual transactions in terms of value to prepare supporting documentation demonstrating reasonableness

6. Deductible expenses

This is an area where costs are often disallowed if not properly controlled.

• Ensure each expense is supported by valid invoices/documents and directly related to business operations
• Verify that payment methods comply with regulations, especially for high-value transactions
• Review sensitive expenses (entertainment, marketing, personal expenses, etc.) to assess the risk of disallowance for tax purposes

7. Other tax obligations

In addition to major taxes, businesses should review all related obligations.

• Review withholding, declaration, and payment of personal income tax, ensuring consistency with payroll data and labor contracts
• Examine transactions involving foreign elements to determine foreign contractor tax obligations and proper withholding
• Reconcile declared tax amounts with actual payments to avoid discrepancies or underpayments

8. Receivables, payables, and cash flow

The substance of transactions is often assessed through receivables/payables and cash flow.

• Reconcile receivables and payables with counterparties and maintain proper confirmation records
• Review long-outstanding balances, assess recoverability, and prepare explanations
• Compare actual bank cash flows with accounting records to ensure consistency and transparency

✅ Conclusion

Tax inspections are no longer reactive events but have become an integral part of corporate governance. For CFOs, conducting an accounting review before inspection should be viewed as an effective risk management tool rather than a defensive action.

Instead of waiting for tax authorities’ requests, businesses should proactively prepare supporting documentation for significant fluctuations in revenue, expenses, or profits.

Proper preparation not only saves time during inspections but also demonstrates professionalism and transparency in financial management.

A standardized, transparent, and well-documented accounting and tax system will not only help businesses navigate tax inspections smoothly but also build a solid foundation for sustainable long-term growth.

In case you need further consultation, please contact TPM via our website or hotline (+84) 28 3505 1800 for prompt support.

Thao Phung