Reverse audits: How to tell if it's right for you
Worried your firm may have overpaid on its state sales and use tax obligations? Having A/P run a reverse audit may alleviate your fears — but is it worth the time and effort?
Here’s what you stand to gain — and lose — from running a reverse audit.
The Pros. Looking at past returns, current activities, etc., will reveal any instances where you overpaid. Also, reverse audits give A/P insight into how the overpayments took place.
Example: If a majority of your refund is the result of a missed exemption, A/P can tweak processes, so those savings are realized immediately in the future.
Note: Claiming your firm is due for a refund on sales and use taxes may cause the state to run its own audit before it reimburses you.
The upside to that: Because A/P already ran a reverse audit, your company’s records will be in top order should auditors come knocking. Plus, it will probably make the whole auditing process less time consuming. For example, if auditors schedule eight weeks to look through your books, the impeccable order of your records will ensure that time frame is reduced.
The Cons. Some firms simply don’t have the time to perform their own reverse audit. Outsourcing the job to a tax practitioner or accountant is an alternative to doing it yourself. But beware, most providers take up to 30% off the top of any overpayments they find. That can hurt — especially if your refund is for a significant amount.
Free Training & Resources
White Papers
Provided by UJET
Webinars
Provided by Yooz
Further Reading
The Securities and Exchange Commission (SEC) just fined a company $35 million because it didn’t maintain adequate disclosure rules fo...
Fully integrated, automated payments! A dream goal for many CFOs and controllers. Imagine how much more mission-critical work finance staff...
An Excel database is perfect for organizing — and clearly seeing — financial data. A database includes a series of records in r...
The median time to complete a monthly financial close is six days – and for some organizations, it takes as long as 10, according to the ...
How did a diversity, equity and inclusion (DEI) program manager defraud Facebook and Nike of more than $5 million? With the help of crooked...
Can a company’s cybersecurity weakness equate to “ineffective accounting controls?” The Securities & Exchange Commiss...