audit

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Audit

A systematic examination of financial or accounting records by a specialized inspector, called an auditor, to verify their accuracy and truthfulness. A hearing during which financial data are investigated for purposes of authentication.

The Internal Revenue Service (IRS) conducts two types of audits, called examination of taxpayer returns, and they are typically conducted using one of two types of procedures. The most common auditing procedure involves correspondence between the service and the taxpayer or interviews with the taxpayer in a local IRS office. A less common method involves field audits whereby IRS officials conduct the audit at the taxpayer's home or place of business. Treas. Reg. § 601.105(b)(1). The service determines which audit procedure should be followed in a particular case. During an audit, an IRS official may question the taxpayer about a particular transaction or transactions that appear on the taxpayer's return or may conduct a thorough investigation of the taxpayer's entire tax return.

Although many people fear audits by the IRS, the percentage of returns examined by the IRS is relatively low. For example, of 108,034,700 returns filed by taxpayers in 1997, the IRS examined 1,662,641, or about 1.5 percent of the total number of returns. Despite this low number, several stories surfaced in the 1980s and 1990s regarding abuses by IRS officials, many of which occurred during the audit process. Congress responded by enacting two "Taxpayer Bill of Rights," first in 1989 and again in 1996. The second act, the Taxpayer Bill of Rights 2, Pub. L. No. 104-168, 110 Stat. 1452, established and delegated authority to the Office of Taxpayer Advocate. This office is responsible for assisting taxpayers in resolving problems with the IRS, identifying areas where taxpayers have had problems with the service, and identifying potential legislative and regulatory changes that could mitigate problems between the IRS and taxpayers.

Further readings

Baran, Daniel J. et al. 1997. IRS Audit Protection and Survival Guide. New York: Wiley.

Cross-references

Internal Revenue Service.

audit

n. an examination by a trained accountant of the financial records of a business or governmental entity, including noting improper or careless practices, recommendations for improvements, and a balancing of the books. An audit performed by employees is called "internal audit," and one done by an independent (outside) accountant is an "independent audit." Even an independent audit may be limited in that the financial information is given to the auditor without an examination of all supporting documents. Auditors will note that the audit was based on such information and will refuse to sign the audit as a guarantee of the accuracy of the information provided. (See: auditor)

audit

verb bring into question, certify, check, check on, conduct an inquiry, examine, examine financial accounts, exxmine the accounts officially, go through the books, hold an innuiry, inspect, inspect accounts officially, investigate, monitor, probe, pursue an inquiry, rationes dispungere, reexamine, review, scrutinize, search, study, subject to examination
Associated concepts: allowance of claim, audit of account, audited claims, auditor, auditor's report, disallowance of claim, fraudulent audit
See also: analysis, analyze, bill, canvass, check, computation, examination, examine, indagation, invoice, monitor, scrutinize, study, test
References in periodicals archive ?
A retrospective audit was performed at Aga Khan University Hospital, Karachi.
Contractual agreements, prompt payment laws, payer settlement agreements, and other statutes may govern when a retrospective audit and overpayment recovery is allowed to occur.
Individuals were considered an "adult persistent" high risk drinkers if they received a score of eight or more on the Retrospective AUDIT screening AND received an eight or more on the current AUDIT screening AND/OR received past treatment for an alcohol or drug abuse disorder.
A retrospective audit was undertaken to review the reasons for, and the appropriateness of, readmissions to the Caludon Centre between April, 2000 and January this year.
We undertook a retrospective audit to assess the value of the addition of serum total protein to liver and bone profiles in detecting new patients with paraproteins.
Integrated with the 3M Coding and Reimbursement System, this software gives providers the option of using the software as a retrospective audit tool or as a way to examine coding transactions record-by-record during the coding process.
The problem was uncovered by a retrospective audit of women with cervical cancer.
TruGuard enables payers with existing PBM contracts to verify and pay only for correctly priced and adjudicated claims, prior to payment, rather than relying on a manual, annual, less efficient retrospective audit.
The goal of this retrospective audit was to review patients attending the urology nurse consultant-led bone support clinic for bone-targeted therapies and the incidence of ONJ.
It was a retrospective Audit conducted at Aga Khan University Hospital Karachi .
We used a retrospective audit design to analyse one renal unit's PD patient cohort rates of peritonitis, and although our findings are tentative given the small sample size, we did follow patients for up to 24 months after commencement of PD.
This retrospective audit looked at patients who have had their postoperative assessment at the referring practice between July 2011 and December 2012.