Some examples of Best Practice strategies to strategize for audits, before they begin.
- Audit defense file for significant transactions and potential risks
- Transfer pricing documentation; contemporaneous, available within the audit request period, without significant penalties
- Inter-company Agreements: signed, readily available; does substance of transactions match the form
- Tax reserves on statutory financials: review, know how to respond to auditor’s queries
- Loan agreements, review for arms-length documentation, rationalize different loans with different interest rates
- Audit notice/telephone call: is there a global communication process for prompt notification and pre-audit planning
- Change of finance personnel, ensure a seamless transition for audit defense files and documentation
- Identify the first point of contact for an audit “raid”
- Who will meet with auditors regularly, company personnel/outside advisors
- Company information, organization charts, etc.; identify what should and should not be provided
- Information for other entities/years not under audit; be prepared to react to such queries quickly and consistently
- Consistency of global methodologies, ensure there is a governance process as tax authorities do exchange information
- Amnesty provisions; how are you made aware of them, process for review if applicable
- Annual review of pre-audit Best Practice strategies for awareness and governance
Hope this is helpful, I look forward to your valuable ideas.