Tax preparation is a huge responsibility for millions of American taxpayers every year. Research shows that people in the United States spend a cumulative 7.6 billion hours preparing taxes annually, paying an average of $140 billion during this time period. Of these people, nearly eight out of 10 taxpayers will receive refunds. However, a number of businesses and individuals will have to undergo an additional step in this process: an audit. Defined as an official, often randomly-selected review of the submitted tax records, many people and organizations will turn to audit accounting services to help them through this process. However, to help you through this stressful moment in professional or personal finance, your audit accounting services will need several documents. Read on to make sure you and your accountants are ready for the road ahead.
- Your General Ledger–Whether you use a computer program like QuickBooks or prefer to stick with the traditional paper route, your audit accounting services will need this to determine how much activity actually needs to be audited.
- Your Trial Balance–All of the numbers in your financial statements are traced back to your trial balance, making it an important document for your auditor. Look for it in your accounting software.
- Copies of Loans, Leases and Material Contracts–Accounting standards require individuals and organizations to disclose all loans, leases and, sometimes, material contracts. The latter might include long-term agreements with suppliers or customers, officer employment contracts, and buy-sell agreements. Your auditor therefore needs copies to make sure these disclosures are complete and accurate.
- Loan Statements–This will help your audit accounting services confirm your current amount of debt and basic information with your creditors.
- All Fixed Asset Purchases With Invoices–A listing of your assets is a basic requirement during an audit. Don’t forget to include any significant fixed asset purchases prior to the years under audit.
- Depreciation Schedule– Many tax methods are acceptable under generally accepted accounting principles, or GAAP: seven years and 200% double declining balance is a common tax method for equipment. However, you are not allowed to take Section 179 bonus depreciation and other basis reductions that occasionally allowed under the tax rules in a GAAP statement. Fortunately, if your depreciation schedules are in a good fixed asset software program, it is usually pretty easy to compute GAAP depreciation.
- Board Minutes–These documents often include important information related to financial statements, making them an important resource to auditors.
- Payroll Reports–Not every business (or individual) may have a bookkeeping payroll service, especially if the process is concerning a non profit company audit. However, auditors need them to test wage expense and look for any unrecorded payroll tax liabilities.
- Stock Information–If you offer your employees stock option plans or have strategies in place to issue stock to key investors, your auditing account service needs this documentation. You’ll also need to include the contact information for any attorneys or agents that helped with the proceedings.
- Merger Agreements–These agreements have a significant impact on your finances and are therefore an important part of any commercial business audit.
- Bank Account Information–Your auditor will need to confirm your bank balance by balance sheet date. Fortunately, many banks now have processes and systems to make this easier.
Do you have all of these documents in order? If not, start collecting them today so that your audit accounting services can get to work helping you through this process.