What is an audit

Aug 20
08:38

2015

Chris Amundson

Chris Amundson

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What is an audit
 

By definition,What is an audit Articles an Audit is an examination of claims. The numbers that are put on the ST-1 or Sales and Use Return are claims.

 
Example:

 

We claim that we had $100,000 in receipts, of which $50,000 were sales taxable, $10,000 was freight, $30,000 was labor, and the last $10,000 was sold to charitable entities and therefore non-taxable. The Department might examine that claim to make sure that you didn’t have $80,000 in taxable sales to see if you were guilty of evading sales tax on the additional $30,000.

 
Another example:

 

We operate a service based business and do not file a sales and use tax return. But we purchased a computer printer from Michigan and failed to report a Use Tax. By not filing a Use Tax return, we are claiming that we did not have a tax, when we actually did have a use taxable situation.

 

In the examination, the examiner will need to see source documents that are by definition untainted. The documents must come from their source, such as a copy of a canceled check from a bank or a receipt from a vendor so that they will be considered evidence. If you have a had chance to change them, then they will be considered tainted, and are non-evidential.

 
If you are having problems with what is an audit or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
 
Chris@AccountingSolutionsltd.com
 
Additional Accounting Articles and information on my firm can be found at
 
www.AccountingSolutionsLtd.com
 

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