Category: 

What Is an Audit Strategy?

If a company decides to perform an internal audit, an audit strategy serves as the basic road map for how to proceed.
Article Details
  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 01 October 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
Coloring your hair in the ‘30s often came with swollen eyelids, blisters and headaches.  more...

October 21 ,  1879 :  Thomas Edison lit up a light bulb for the first time.  more...

An audit strategy can refer to a design to carry out an internal audit, or to a plan designed to handle an audit by an outside agency such as a tax bureau. In both cases, proper planning, research, and organization can contribute to a faster, more efficient process. There are many different theories on how to approach an audit strategy; for complex cases, many financial experts suggest hiring a qualified account or consultant who can ensure that all regulations are comprehensively met during the process.

If a company decides to perform an internal audit, an audit strategy serves as the basic road map for how to proceed. In addition to logistical concerns such as when the audit will occur, if it will be performed by internal accountants or an outside professional, and how long the process will last, the audit strategy sets goals for the audit to accomplish. For instance, a financial institution might make it a primary goal to see how vulnerable they are to fraud or misuse of funds, or if changes to staffing and customer services have lead to a significant increase in costs. The audit strategy may also include estimations as to the cost of the auditing process.

Ad

The point of an internal audit is usually to identify areas of waste and high risk; a successful audit will give an accurate report on how funds are spent and the level of risk involved in the department. Creating a good audit strategy with targeted goals can help ensure that necessary data is gathered to create and implement efficient solutions to any problems. If a department has recently undergone implementation of a plan for increased efficiency, an audit can also help determine whether the goals of the plan are being met.

When being audited by a tax agency, such as the Internal Revenue Service (IRS) in the United States, an audit strategy helps prepare and manage this often difficult process. If a person or company is audited despite filing and paying all taxes correctly, the audit strategy will focus on proving this fact conclusively. In cases where mistake, fraud, or insufficient funds have led to tax problems, an audit strategy will usually focus on creating an equitable solution.

Regardless of the reasons for the audit, the first step in any audit strategy is to organize all relevant papers that will be needed. Most audits begin with a notification that specifically lists which issues are at hand, which means that the taxpayer being audited will have a reasonably clear picture of what type of documentation will be necessary. It is also important to decide whether a company or taxpayer will handle the audit alone, or retain the services of a tax lawyer. If planning to manage the audit without legal assistance, some strategies also suggest choosing one person only to speak to the IRS agent, in order to cut down on the possibility of conflicting statements.

Ad

More from Wisegeek

You might also Like

Discuss this Article

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email