Key Tips for Audit Preparation

IRS2If your company was subject to an IRS audit, would you be prepared to respond?

A mACCOUNTING's client was recently audited by the IRS.  Although we did not prepare the tax return, we were responsible for bookkeeping and controllership services, including maintenance of all accounting records - from credit card receipts, to vendor invoices, to bank statements.  With a large number of travel and entertainment expenses claimed on the return, we knew that this was an area that would be examined closely.

Prior to the audit, the IRS agent sent a letter detailing the records that our client would be required to provide. it was no surprise that credit card statements and a detailed list of travel and entertainment expenses were on the list. 

While some businesses may struggle with this oversight, mACCOUNTING was able to promptly retrieve statements from the files, along with the receipts, as well as create a printed detail from Quickbooks.  For all expenses examined by the auditor, we were able to answer: who, what, where, when and why. 

In the event of an audit, a business owner should be prepared to turn over records with the following information:

•           Who was present and their relationship to the taxpayer (Who)

•           The amount of the expense (What)

•           The location (Where)

•           The date (When)

•           The business purpose or expected benefit of the expenditure (Why) 

When the audit was completed ahead of schedule, we received a note from the auditor thanking us for our preparation and oversight.  More importantly, the final report recommended no changes to the tax return and the client saved money by having mACCOUNTING involved rather than the tax preparer.

Avoid putting your business at risk. mACCOUNTINGcan help your business prepare for IRS audits with our bookkeeping and controllership services.