Saturday, June 4, 2016

21 Questions You Need to Know About a Client's Business in an Audit


The following are 21 questions every practitioner should know an answer to before heading into an business audit with the IRS:
 

  1. Chart of Accounts Used?
  2. Accounting Method? 
  3. How was Income Determined? 
  4. Is a double-entry accounting system used? 
  5. Individual Responsible for: 
  • General Bookkeeping 
  • Cash Receipts 
  • Accounts Receivable 
  • Accounts Payable 
  • Sales 
  • Purchases 
  • Reconciling Bank Statement
 
  1. Who adjusts and closes book? 
  2. Who handles deposits? How often are deposits made? 
  3. Who opens the mail? 
  4. How are credits memos and returns handled? 
  5. Are personal funds of shareholders and officer kept completely separate from business funds
  6. Are sales orders, work orders, and invoices pre-numbered? Are all numbers accounted for and used in sequence? What happens to voided orders and invoice?
  7. How do you handle month-end and year-end cut-offs?
  8. Are there policies covering the aging of accounts receivable? Are they followed?
  9. Who authorizes write-offs of receivables?
  10. Who authorized write-off of obsolete inventory? What guidelines are used? Who authorizes the write-off of other assets?
  11. How are cash sales handled? Are duplicate deposit slips kept? Is cash deposited intact?
  12. Who authorizes purchases of major items?
  13. How are payrolls handled? Example: Separate payroll account?
  14. How much petty cash is kept on hand? Who has access?  Is a voucher system in use?
  15. How often are bank reconciliation’s prepared?
  16. Are physical counts of inventories made? How often? Are the records available?
     

No comments:

Post a Comment