The following are 21 questions every practitioner should know an answer to before heading into an business audit with the IRS:
- Chart of Accounts Used?
- Accounting Method?
- How was Income Determined?
- Is a double-entry accounting system used?
- Individual Responsible for:
- General Bookkeeping
- Cash Receipts
- Accounts Receivable
- Accounts Payable
- Sales
- Purchases
- Reconciling Bank Statement
- Who adjusts and closes book?
- Who handles deposits? How often are deposits made?
- Who opens the mail?
- How are credits memos and returns handled?
- Are personal funds of shareholders and officer kept completely separate from business funds
- 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?
- How do you handle month-end and year-end cut-offs?
- Are there policies covering the aging of accounts receivable? Are they followed?
- Who authorizes write-offs of receivables?
- Who authorized write-off of obsolete inventory? What guidelines are used? Who authorizes the write-off of other assets?
- How are cash sales handled? Are duplicate deposit slips kept? Is cash deposited intact?
- Who authorizes purchases of major items?
- How are payrolls handled? Example: Separate payroll account?
- How much petty cash is kept on hand? Who has access? Is a voucher system in use?
- How often are bank reconciliation’s prepared?
- Are physical counts of inventories made? How often? Are the records available?
No comments:
Post a Comment