Asset ownership, asset valuation, and manager representation are common audit issues. An asset valuation audit occurs when insufficient evidence is provided, while an ownership audit is due to a lack of proof of claimed assets. Management proxy audits occur when management provides false information. Contact a qualified accountant if you receive an audit notice.
Although audits can seem quite random, certain audit issues tend to show up much more than others. Some of the most common audit issues include asset ownership, asset valuation, and manager representation. While these terms may seem complicated, each type of audit can be easily understood after careful examination and explanation.
An asset valuation audit occurs when a person or company has failed to provide sufficient evidence to support specific claims. Sometimes auditors omit information that a filer has included. When this happens, the auditor is at fault. However, most people refuse to submit supporting evidence proving that certain claims are true. In this case, a person has a set number of days to produce the proper documentation, or an official auditor will visit the guilty person.
When an audit is due to ownership of an asset, a person or company has not included proof that certain claimed assets are owned. This becomes a problem if a person or company claims ownership of an asset, but cannot present evidence to support this claim. Again, an auditor may overlook the included paperwork, although this is rare in the case of asset ownership. Both companies and individuals must submit the proper documentation to an auditor within a certain number of days, or an inspector will dig deeper into a case.
Management proxy audits are very different from property or asset valuation audits. If an auditor cannot stomach management responses to various queries, then the management team in question may be further investigated. This type of situation occurs when an auditor tries to collect information about a company, even though the company’s management team provides false or misleading information.
Clearly, all of the audit issues mentioned above are unique, although these particular audit issues tend to occur frequently. Generally, an auditor will give a person or company enough time to produce documents. However, if a business or individual is under investigation for fraud, then an auditor may prefer to conduct a one-on-one interview.
Any person or company representative who receives an audit notice should contact a qualified accountant. While most audits can be resolved without much confusion, a professional accountant will be able to handle the details of the audit with skill and ease. Audit issues happen on a regular basis, and most of the time the issues that trigger an audit are easy to fix.
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