If you have heard of Al Capone and you will understand what I am talking about when I say that it was the Accountants who took on the Mob.

Al Capone was a legendary criminal. He never finished his sixth grade but the man was not stupid. At the age of 26 he became the head of Chicago’s underworld. He gained a stature of an international celebrity because of the odd blend of charm and brutality. In the year 1930, he was the top most wanted man in Chicago.

Chicago in 1920s was facing a lot of brutality and killings. The rival gangs were killing each other and their drive-by shootings became quite common. No one was safe:  neither general people nor public servants. The gangland murders which previously totaled to 16 in  a year, in his rule increased to a massive total of 64.

Al Capone was basically from NY but drifted to the west later on. His career as a gangster started when he was working under the crime leader Johnny Torrio. Johnny was involved in the inner circle of gangsters. After his death, Capone took over and consolidated his criminal career with prostitution, gambling, extortion and liquor racket. He made piles of money from his business ventures, which actually came from the killings and crimes but the case that was handled by his prosecutors make it look like a tax evasion.

He was an astute businessman. He hid most of his illegal earnings and never endorsed a single check in his lifetime. He did not maintain a bank account in his name and therefore conducted all his dealings in cash. After long inquiries and searches, the government was able to find out few people who agreed to testify against him and finally filed a case of tax evasion.

He was ultimately found guilty on that ground and was sentenced to a ten year long imprisonment and one year in Chicago prison. While he was serving his imprisonment Capone contracted Syphilis and brain damage as well. He grew insane after the seventh year due to an infection.

The year 1946 saw the death of Al Capone. His death had quite unexpected effect on the legitimate citizens as well as criminals. They began paying IRS for their back taxes. A grand total of $1million was deposited in the name of unpaid tax-fillings and this amount was just double the amount the previous year’s total.

It was only through the ingenuity of the accountants that a dangerous criminal like Al Capone was arrested. And it is also because of the hard work put in by these Accountants that the common people re-established their belief in the government.

Most of us have heard the word audit but we rarely know what it actually means. If you are also trying to understand what an audit is then you are at the right place. An audit is basically an accounting technique in which the financial records of an organization, company or an individual are inspected accurately to ensure that they are precise and accurate. 

Most of the the taxpayers fear an Internal Revenue Service audit, whereas the dishonest organizations fear the independent audits as it may reveal the misuse or embezzlement of their funds. An audit helps in keeping the company honest and also reassures the investors and the employer about the financial condition of the organization in which they are working.

There are basically two types of audits. They are:

1. Internal audits
2. Independent audits

The audits are usually performed without any partiality.

The internal audits of the company are generally conducted by the accounting department of the concerned organization. It is seen that various companies carry out regular internal audit checks so as to keep different finances in order and to see if the public trading of the company is going smoothly, and also to find out whether the reports are available for inspection by the stockholders.

The external or independent auditing is basically done by the third party like a professional accounting organization that specializes in providing external auditing services.

In both the cases, the financial records of an organization including bank statements, ledgers, tax information, pay rolls, official published reports, internal financial reports, accounts receivable and accounts payable will be scrutinized. At the time of an audit, the records of the company are inspected closely to search for any kind of discrepancies and inaccuracies so that they can be repaired and addressed.

Conducting audits is very important for most companies and organizations. There are many reasons for that.

An audit commonly brings the simplest accounting mistakes into notice. Also, during the time of an audit the sinister issues like misappropriations of funds (if any) are also brought into the limelight. The organizations that are struggling financially usually end up making some wrong financial decisions in order to salvage their organization and such decisions are then disclosed by a very close audit. 

It so happens that an audit also discloses if a company on the verge of bankruptcy due to the high misuse of the funds. Examples like WorldCom and Enron will come to mind where such discrepancies were exposed via audits.

Typically when any kind of inaccuracy is disclosed through an independent audit, it is repaired by the auditors in its final report to the company. In few cases, the audit is ordered by an external body like the Exchange Commission who will also receive a copy of the audit report. 

So, to sum it up, companies are audited to remove inaccuracies and prevent the misuse of funds available to an organization.

A tax is a payment or more precisely a fee that is paid by businesses and individuals to the government. The taxes are usually paid in cash. The funds collected via taxation are usually used by the government to fund various public spending ventures. Let us have a look at the different reasons for why we are taxed and the different places where this money is spent by the government.

Most of us have seen our fathers and other family members pay tax every year but hardly any of us have tried to know the reason for it. The government has been collecting taxes for many different purposes. The main and the primary purpose or an answer for why we are taxed is for the benefit of general public.

There are many reasons for which we are taxed by the government. These are:

1. To support different governmental operations
2. To improve and influence the performance of the economy
3. Let the government perform different functions like national defense and several such services properly
4. To redistribute the resources between classes or individuals in the population
5. To make the life of the common man more comfortable by providing them different amenities and latest technologies
6. To modify the patterns of employment and consumption in an economy by making the classes of transaction less or more attractive

In plain and simple terms, the money taken from us via taxation is used by the government in a number of activities that make sure that we citizens have access to a variety of amenities and facilities. On a broader perspective, the money collected via taxes also helps the government to maintain a certain level of equilibrium in the economy with regards to prices and costs.

Mostly the uses of the money we pay as taxes is seen when we see crews building roads and bridges. There are also other places where this money gets spent. These funds go towards maintaining schools, libraries, police and fire services. These funds also help pay the salaries of the government employees. The money thus collected is also used to build and maintain public buildings. Several health services and pensions are also funded by the tax money paid out by us. One more use of the money collected via taxes is to help in the maintenance of the defense services of the country.

There are also a number of other means via which the government collects funds for maintaining the public services that it provides. For example, when we pay a toll for using a stretch of the freeway, we are also contributing towards helping the government in keeping the road in good order. This kind of a payment is also a type of tax that we pay to the government.

Ideally, the funds collected from us via taxes are supposed to be equal to, if not more than the expenses incurred by the government. However, more often than not, such is not the case. The government usually ends up spending more than what it receives. This is probably the reason why the government has to borrow funds to remain afloat, and yet another reason why we should pay our taxes on time!