Thursday, September 6, 2012

IRS Business Auditing Processes & Procedures

If your business is ever subject to an audit, it is important that you know the general procedure that the IRS agent will conduct in their examination. Some of the things that an IRS agent will conduct are interviews, touring the business facilities, inspecting the businesses internal controls and many more. It is important that you understand that these procedures need to be carried out correctly by the IRS agent or the audit could be subject to objections in court. All IRS agents are given audit manuals that show them exactly how to carry out an audit. This manual can be found online by going to the IRS website.
Inspecting Your Business Internal Controls
The first order of business for the IRS agent will be to conduct a thorough investigation of your businesses internal controls. Your internal controls are how your business keeps its financial statements clean and free of material mistakes. Things like how you segregate duties and keep your checks from being used incorrectly will be very important to the IRS agent. This procedure happens first because it gives the agent the ability to sort through high risk and low risk accounts and which of those have any tax consequences.

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Source: Barbara Cruz

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