Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
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Chapter 4 Books and Records Characteristics The books and records of a Type A dealership are very similar to other cash businesses and will not be the focus of our discussion. Dealership Type’s A, B and C were discussed in the Financial Status chapter. The books and records of a Type B and Type C automobile dealership whose efforts are concentrated on the sale of new vehicles have several features the examining agent should keep in mind before and during the audit process: 1. Voluminous Records With literally hundreds of books, thousands of accounts, and millions of entries, new automobile dealerships may have the most "full" set of books and records of any non-regulated, non-traded company. Source codes, grouping papers, and the manufacturer’s accounting manual are the key to not getting lost and conducting an effective audit. These books are almost exclusively in an electronic format with subtotals carried forward throughout the course of the year. 2. Overwhelming Voluminous records, in conjunction with experienced taxpayers and representatives make the agent’s job difficult at first. A well planned and organized audit, embracing SAIN, will help the examiner focus the examination, mitigating the "overwhelming" factors. 3. Financial Statements One of the most important tools is the manufacturer’s statement which is prepared regularly (usually monthly) and sent to the manufacturer who keeps well abreast of the dealership’s business operations. These statements are standardized per the factory manual and can be reconciled to tax items. This process can establish confidence in the books in order to curtail reconciliatory and verification activities. 4. Accounting Manual Each factory has its own accounting manual, typically 500 pages or so of format and procedure. This is a must for the examining agent and should be obtained for use at the beginning of the audit. The manual should be used as a tool throughout the examination. 4-1
- Page 1 and 2: Internal Revenue Service Market Seg
- Page 3 and 4: Preface One of the goals envisioned
- Page 5 and 6: Table of Contents Preface .........
- Page 7 and 8: The Reinsurance Transaction .......
- Page 9 and 10: Part 1 General Focus and Procedure
- Page 11 and 12: 1. Type A Return Information Schedu
- Page 13 and 14: Percentage has gone down. The incre
- Page 15 and 16: the principal shareholders to finan
- Page 17 and 18: Rents $ 500,000 Interest $ 50,000 C
- Page 19 and 20: Conclusion "Financial status" is on
- Page 21 and 22: Chapter 2 Getting Started The key t
- Page 23 and 24: entities and their purpose and rela
- Page 25 and 26: It is recommended that officer comp
- Page 27: Chapter 3 Standard Audit Index Numb
- Page 31 and 32: c. Reconcile (2): Beginning Trial B
- Page 33 and 34: 3 Repair Order Sales 4 Parts Sales
- Page 35 and 36: Conclusion Although intimidating at
- Page 37 and 38: Chapter 5 Balance Sheet Why do we c
- Page 39 and 40: When an adjustment to a balance she
- Page 41 and 42: Part 2 Inventory Chapter 6 General
- Page 43 and 44: . Purchasing c. Handling, processin
- Page 45 and 46: dealerships use specific identifica
- Page 47 and 48: Chapter 7 LIFO Background Overview
- Page 49 and 50: A Short History of LIFO Application
- Page 51 and 52: improper inflation through unwarran
- Page 53 and 54: Introduction Chapter 8 Computing LI
- Page 55 and 56: The double extension index formula
- Page 57 and 58: as one item, there would probably n
- Page 59 and 60: (existing items) and non-comparable
- Page 61 and 62: The current-year costs that can be
- Page 63 and 64: Assuming the dealership elects LIFO
- Page 65 and 66: matching of revenues and costs. Thu
- Page 67 and 68: section 1.471-9. Both of these regu
- Page 69 and 70: providing to the credit subsidiary
- Page 71 and 72: Under elections made prior to Decem
- Page 73 and 74: Base Year Cost 9112 $224,000 You ha
- Page 75 and 76: BLS Sanity Check A simpler means to
- Page 77 and 78: CYC = Current Year Cost. This is th
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