Audit - is NOT a dirty word 

Last week I had the absolute privilege of sitting in on an ATO Audit of a client - I was invited to attend by the accountant and what I witnessed has got me to thinking...

We live in a self assessment regime - when the ATO comes knocking ....how do you know what to do ?
Are your tax affairs in order - who offers the correct assurance and support?

Your bookkeeper and accountant - that's who !

Before I share the scary story of the audit - fascinating stuff - let's break it down and discover what actually happens and how you can be best prepared.

1. Have an awesome set of books

Reconciled accounts - accurate and concise will impress the ATO - use a bookkeeper if you are unsure - if you do the books yourself - maybe engage a bookkeeper to do a 'welfare check' of your processes pre audit so you know your weaknesses and can promote your strengths to the Auditor.

2. Review your compliance history

Do you lodge on time ? Do you pay on time ?
If not - why ? What are the roadblocks to this ?
Are you time poor? Might be time to outsource this function (bookkeeper or accountant)
Is your cash flow messy ? Time to get tips and tricks from the experts (ahem - bookkeeper and accountant) on nailing this
The ATO look kindly on a good compliance history.
When the audit day comes - this can be a great asset

3. Audit Insurance

Having the right advice and support is crucial - but everyone's time is valuable - consider the investment in Audit Insurance to pay for peace of mind to cover your accountant and bookkeeper's fees

4. Be Prepared (Boy Scouts Motto)

Look at the Audit period = review the Audit letter - have documents in a concise, orderly manner
Show the ATO you take this seriously and have systems and processes in place to ensure compliance
Often they will ask for a sample of documents- have them on hand - this demonstrates commitment and transparency that they will respect

5. Have a team meeting

Pre audit meeting - meet with your accountant and/or bookkeeper to 'review the play'
Often they have been through these meetings before and know what to expect
They are not the tax payer so they can take an unemotive analytical role in your support offsetting your emotion

So ...now to the actual story of what happened - grab a latte and sit back ...its a doozy ...

Client engaged a subby.

Subby complained to ATO that they were not paid superannuation.

What resulted was an audit that encompassed :

• GST
• Fringe Benefits Tax (FBT) - private motor vehicle usage extensively looked at
• Superannuation obligations
• Contractors
• Payg
• Wage rates

It resulted after a 4 hour meeting with 2 A4 pages of follow up questions !

Do you have the confidence in your data that you can survive AUDIT ?

PS Loved the fact that the ATO spent the first 10 minutes congratulating the client for WONDERFUL compliance and engaging the right team !