(redirected from Auditability)
Also found in: Dictionary, Thesaurus, Medical, Financial, Encyclopedia, Wikipedia.


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.


Internal Revenue Service.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.


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)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
We employ a game theoretic approach to model the proposed bidirectional auditability mechanism in order to establish Nash Equilibrium between the charging plate and the vehicle.
Implementing auditability as a service will utilize the cloud resources to generate the response to the challenge issued by the third party auditor.
The group is now close to finishing the design of a prototype known as the STAR (Security, Transparency, Auditability and Reliability) Voting System.
The Public Company Accounting Oversight Board should also be an active participant in this process to allow for auditability of those accounting principles."
'Through our partnerships with Accellion, Cellcrypt and Taptera, Fixmo SafeZone customers can now embrace a full suite of enterprise collaboration, document management, and productivity tools on corporate-liable and employee-owned devices without compromising security, auditability or compliance.'
Additionally, newer enterprise resource planning (ERP) systems do not guarantee auditability. ERP systems may not fully support audit readiness or may not yet be fully operational at the time of audit.
"This standardized system will provide transparency and auditability," said John Koski, director of Air Force information systems and technology.
Insurer Analytics' expanded capabilities include additional out-of-the-box content for policy around adjustments, coverages, and active policies; an extension of the data warehouse to provide basis for expanded policy analysis; comparison of result data against baseline and trend; large data set visualization including time based progression; global, ranking and dynamic filter capability; set key performance indicator (KPI) targets for service level agreements (SLAs) from the user application; grid enhancements; dashboard manipulation; analysis input manipulation; search capability and extended parameterization; and auditability for ETL.
For auditability we must run the thread from the receipt of dollars to the outlay and closure of the contract and reflect those various points when we compile the financial statements.
Furthermore, in light of the Secretary of Defense's recent decision that the Statement of Budgetary Resources is to be audit ready by fiscal year 2014, it is critical that the department have such systems in place to support its auditability goals.
It also delivers full auditability of all screening results and investigations for fast and comprehensive submission to the regulator if required.
New functionality delivered in the core component of the Systems Director version 6.2 product include: a simplified user interface designed to make it easier to discover systems and install updates; better integration with Tivoli and Java; and improved security and auditability, among other enhancements.