This is an essay on Audit Technique Guides, how they are used, and how they can benefit taxpayers.
Audit Technique Guides are particularly useful to tax practitioners because they provide a strong foundation when advising clients of audit risk and they point out common areas for mistakes, provide a brief but inclusive overview about typical business practices within a market segment, and are perpetually being updated and changed. This article will discuss these reasons and also provide a quick overview of the ATG for cash intensive businesses, which is one of the most widely used ATGs.
ATGs provide a quick but functional overview of typical business practices in an industry. This allows a practitioner to find out where people in a client’s industry make mistakes that affect their taxes. Common mistakes include keeping incomplete or unreliable books, records, or supplier lists; housing off-book inventory; using unorthodox methods of conducting business; and commingling business and personal funds.