Multistate Audit Best Audit Practices - California Franchise Tax Board

MULTISTATE AUDIT BEST AUDIT PRACTICES
OPENING CONFERENCE
when the prior audit development of the issue was comprehensive and after
determining what current development is necessary to ensure that the facts in the prior
audit are applicable to the current years. If this is feasible, it should be discussed with
the taxpayer.
New audit issues – You might be able to discuss specific issues, for example a sale of
an operating division or product line reported as non-business income. However, for
other issues, a more general outline can be provided.
The taxpayer should be informed that additional issues might arise from the review of
information in support of the tax return.
Ask the taxpayer if they have changes or issues that they want to submit for
consideration. The earlier that you discover potential claim issues, the easier it is to
adhere to your audit timeline.
e. Tax Return Preparation
Obtaining information on how the return was prepared will provide valuable information on
how to address issues and identify where knowledge might reside within the taxpayer’s
organization.
Who prepared the return? If they are not the same people you are dealing with, are
they still available for questions or information?
Was the tax return prepared by the taxpayer or outsourced?
What part did the tax department prepare? What part did the divisions prepare?
What instructions were issued to people who prepared parts of the return? Are the
return preparation guidelines available?
How was apportionment information compiled?
Where are the tax preparation workpapers located and what lead time is needed to
obtain them?
Are the tax preparation workpapers stored electronically? If so, in what format? Can
they be exchanged electronically?
Have State or Federal amended returns been filed? If so, what is the status of these
amended returns?
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