Successful Audits

Tips for a successful audit

  1. Stay on track: do not give the auditor more than they need (ie: don’t give them the Quickbooks file with 10 years of data for a 3-year audit.  In fact, don’t give the Quickbooks file at all.  Just the journals that are required).  Don’t discuss personal matters or otherwise have conversations with the auditor.  A seemingly innocuous mention of your trip to Hawaii may get the auditor thinking about how you afforded the trip.  While you are at it, park your Bentley in the back, and don’t let the auditor see anything flashy.
  2. If you can avoid dealing with the auditor director, do so. There is nothing wrong with having a representative. It’s not a sign of guilt, and it is your right. And the nice thing about having a representative deal with the auditor is that they can handle the difficult questions for you.  If a question was posed directly to you by the auditor, it is hard to come up with a clever answer on the spot. You may seem cagey or like you are lying. A representative can just answer the question with “I don’t know.  Let me find out”.  This can buy time to get your ducks in a row.
  3. If you are presented with a waiver, DO NOT SIGN IT without legal representation.
  4. If you do have a representative, have the audit performed at their office not yours. This prevents the auditor from poking around or speaking to your staff.
  5. Don’t get frustrated if the auditor doesn’t see things the way you do. It doesn’t mean that they are right.  Sometimes you have to object to the auditor’s findings.  And sometimes you have to appeal the appeals officer’s findings to Tax Court.  That’s just the way it goes sometimes.  See my article below.

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