What is the difference between a tax compliance audit and a financial statement audit?

A tax compliance audit primarily concentrates on verifying adherence to tax laws and regulations governing income, sales, property, or other specific taxes. It ensures accurate reporting of financial information to tax authorities. On the contrary, a financial statement audit focuses on examining the accuracy and reliability of financial statements. It scrutinizes the company's overall financial health, assessing the adherence to accounting standards such as GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards).