Audit pro 411

Why the IRS May Contact You..... Taxpayers should understand that an audit in no way implies suspicion of criminal activity.  Tax returns are complicated documents carrying financial data that must be evaluated to confirm accuracy. The audit process is known as an examination and does not imply that you have intentionally made an error. In fact, the IRS contacts individuals for a variety of reasons. Taxpayers are chosen through a “random selection and computer screening” process, according to the IRS, that is based on a statistical formula. The IRS compares tax returns against “norms” for similar returns. If your return doesn’t follow the “norms” you may be chosen for an audit. If your tax filing includes transactions with other taxpayers , such as business partners or investors, and they were audited, you also may be audited. Some returns are chosen based on other factors like income reported or unusual deductions. Other reasons you may be audited: Conflicting third-party rep...

What Is an Audit? The term audit usually refers to a financial statement audit. A financial audit is an objective examination and evaluation of the financial statements of an organization to make sure that the financial records are a fair and accurate representation of the transactions they claim to represent. The audit can be conducted internally by employees of the organization or externally by an outside Certified Public Accountant (CPA) firm. Types of Audits External Audits Audits performed by outside parties can be extremely helpful in removing any bias in reviewing the state of a company's financials. Financial audits seek to identify if there are any material misstatements in the financial statements. An unqualified, or clean, auditor's opinion provides financial statement users with confidence that the financials are both accurate and complete. External audits, therefore, allow stakeholders to make better, more informed decisions related t...

The International Auditing and Assurance Standards Board (IAASB) published a  staff audit practice alert  Friday that is designed to highlight key areas of focus for auditor reporting related to the coronavirus pandemic. The alert highlights potential implications for auditor and interim review reports related to the pandemic that include: Modifications to the auditor’s opinion due to material misstatement of the financial statements or an inability to obtain sufficient appropriate evidence. Material uncertainty related to going concerned. Inclusion of key audit matters and/or emphasis-of-matter paragraphs. Reporting implications for interim review engagements when the auditor of the financial statements also is performing the interim review.