If the Canada Revenue Agency (CRA) decides to audit your client, that can be stressful, scary, and confusing. You can help your client by reassuring them of your support, helping them gather necessary records, and acting as a buffer between them and the auditor.
To lessen the fear around the audit, let your client know that audits are just an ordinary part of the CRA’s job. Explain that the CRA has to audit many perfectly honest taxpayers in order to find the few dishonest ones. Reassure them that you will be there helping and supporting them throughout the audit process.
Review your client’s bookkeeping and tax returns. This can help you identify where your client’s recordkeeping may be incomplete or need additional documentation. For example, if your client’s home office deduction is being questioned, you can help your client gather all the documents they have that directly supports that deduction, such as measurements, utility bills, and records of business meetings. If there are discrepancies, it’s always better if you spot them before the auditor does. Additionally, make sure your client comes to the audit meeting with all the usual records an auditor is likely to review, such as bank statements, income records, and balance sheets.
Act as a buffer for your client by asking the auditor to provide their questions in writing before the audit meeting. Doing this gives you and your client the opportunity to carefully prepare answers to the auditor’s questions in advance. It can also help your client avoid making any unintentional misstatements in the audit meeting.
An audit can strike fear into the heart of any taxpayer, even if their records are meticulous and their return is error free. As an accountant, you can help to alleviate your client’s concerns and hold their hand through the process.