Tue 11th Dec, 2012
Audit Insurance pays for accountant fees incurred to manage a State & Commonwealth Government Agency "Compliance" audit.
Other Professional fees are also included, such as obtaining a legal opinion.
Not covered are additional taxes, duties, premiums or superannuation contributions imposed.
- Self Managed Super Funds
- Self Employed
- Business & Trading Entities
Those parties who periodically lodge "returns or declarations" with State & Commonwealth Government Agencies who conduct "compliance" audits.
Who are these agencies?
State & Commonwealth Government Agencies are those that oversee taxes, duties, superannuation & workers compensation. Examples include payroll tax, stamp duty, workers compensation, gaming, income tax, goods & services tax, fringe benefits tax, capital gains tax, superannuation funds & contributions, customs, etc.
Why would they pick me?
You may be selected for an audit of a previously lodged 'return or declaration' or be subjected to a 'compliance audit' for any number of reasons:
- Electronic selection. Government agencies are spending huge amounts on data matching (i.e., gathering information from various sources & cross checking against declared in 'returns & declarations' various transactions have been recorded).
- Manual selection. Your 'returns or declarations' may be inconsistent with 'returns & declarations' lodged by others in the same industry sector.
- Annually, various government agencies will focus on a particular industry sectors.
- Accountancy firms are audited & various client files can be selected for closer examination & audit.
- As a result of auditing another party, the government agency wants to cross check or validate the opposite transaction.
- Checking to see if your business is properly registered with relevant government agencies & paying obligations or your Self Managed Super Fund is compliant.
- Being dobbed in.
When an audit occurs, it's best to engage your accountancy firm because accurate preparation is critical. If any errors or omissions are found & reported to the government agency before they commence their audit, potential fines or penalties can be avoided or significantly reduced.
Accountant's fees can be substantial, depending on the nature & complexity of the audit. This can be a challenge in times of tight cash flow. But there's no need to carry the risk as Audit Insurance is an economic "comfort" buy.