Academic journal article Journal of Accountancy

IRS Memo on Intrusive Audit Techniques Not Enough, Says AICPA

Academic journal article Journal of Accountancy

IRS Memo on Intrusive Audit Techniques Not Enough, Says AICPA

Article excerpt

The latest Internal Revenue Service memo to its regional chief compliance officers lists the American Institute of CPAs concerns about the use of financial status audit techniques but does little to change the intrusive methods agents use to search for unreported income, according to the AICPA.

"The concerns we have brought to the attention of the IRS have not been addressed in this IRS memo," said Michael J. Knight, chair of the AICPA small business taxation committee. Knight said the IRS was resisting change because it believed the financial status audit techniques were successful. "But this is not a good program because it combines an intrusiveness that previously did not exist in the normal audit process, and it reintroduces taxpayer interview techniques that were dropped when the Taxpayer Bill of Rights was passed in 1988," said Knight.

In a letter to IRS commissioner Margaret Milner Richardson, Deborah Walker, chair of the AICPA tax division, said the most recent IRS memorandum "lacked both clarity on the matters it covers and coverage of other matters of great importance." Thomas W. Wilson, Jr., IRS acting assistant commissioner--examination, sent the memo to compliance officers in March after a series of meetings with representatives of the AICPA. In those meetings, the AICPA urged the IRS to withdraw the training modules compliance officers use when employing financial status audit techniques in their examinations. …

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