audit

Definitions (2)

1. An examination and verification of a company's financial and accounting records and supporting documents by a professional, such as a Certified Public Accountant.
2. An audit is an IRS examination of an individual or corporation's tax return, to verify its accuracy. There are three types of audits: correspondence audits (the IRS mails a request for additional information), office audits (an interview is conducted at a local IRS office), and field audits (an interview is conducted at a taxpayer's place of business, for a corporate tax return). Since there is always the chance of an audit, experts recommend keeping good records to support all the information in a return. The reason detailed and accurate bookkeeping is so important is that the burden of proof is on the filer, not the IRS.

Use audit in a sentence

Bill filed his taxes carefully and made sure all his receipts and purchases were in order, just in case the IRS wanted to audit him.

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I was tempted to cheat the IRS in order to get a better tax return, but I was too afraid of getting an audit to actually go through with it.

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If you lie on your taxes, you might want to rethink that, because when there are discrepancies in your tax return, you could be subject to an audit by the IRS, who will double check your information.

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