Audits: Did You Know This?
“Audits are used to measure risk, assess performance, and detect areas requiring corrective measures” (Factorial Blog). Undergoing an audit can be a daunting and worrisome experience as violations can lead to heavy consequences.
To receive a stellar report, there are a few things that companies should keep in mind when preparing to be audited.
Factors that can influence audits:
Company size: Large and well-established have many more moving parts which can lead to violations due to disorganization, lack of communication or other factors. It is important to increase communication among employees and managers and ensure that tasks are being completed properly at every level.
Company organizational structure: The way that the company is organized in terms of management and reporting can play a large role in passing audits. Miscommunication can lead to silly violations that can easily be prevented by having a well-organized and clear structure within the company.
Internal control factors: Being ready at each moment for an audit is a great way for a firm to prepare. Acting as if the company will be audited daily is a good practice in ensuring that bosses and employees are following the rules and regulations in place.
Wellbeing of employees: When employees are happy at work, they do a good job. It should be a top priority for management to ensure that their employees are happy, healthy, and are receiving the help they need. These practices not only help firms to pass audits but also help guarantee the longevity of the firm’s success.
Audit firm size: Auditors that come from a large firm have a reputation to uphold and will enforce all rules and regulations to maintain that reputation. It might be less risky for a smaller audit firm to make a mistake as their reputation is likely not as established.
Experience of auditor: Your final report can vary depending on the skill and experience of your auditor.
Communication between auditors and company: Maintaining a good relationship with your auditor can help the process move more smoothly. In order to ensure that the audit is fairly conducted, maintaining professionalism and being easy to work with is essential.
What you wish you knew when facing an audit:
Penalties vary: Depending on the type of violation, penalties can vary from fines, to criminal charges to prison sentences.
You can appeal a decision: If you believe that your audit report was unfair or you disagree with the decision, you can appeal a decision.
Audits are not random: “The IRS has a complex procedure for choosing tax returns to audit” (Hyden, Miron & Foster, PLLC). That being said, making decisions each day as if your company will be audited is crucial in preparing for audits and being able to pass them without receiving any violations.
If you are concerned about an upcoming audit, reach out to a member of Loffa today.
We can help you manage your workflows in an efficient and safe way.
Lesiuk, Tanya, and Valerie. “Hidden Factors Affecting Your Company Audit - Factorial.” Factorial Blog, 25 Mar. 2020, factorialhr.com/blog/company-audit/.
“Five Things You Didn't Know About IRS Audits: Hyden, Miron & Foster, PLLC Law Blog.” Www.hmflaw.net, www.hmflaw.net/lawyer/2018/10/05/Taxation/Five-Things-You-Didnt-Know-About-IRS-Audits_bl35599.htm.