How we select files to audit

Your tax return is recorded in a computer system that enables us to select returns to be audited. The system also lets us sort returns into various groups to help with our selection.

In some cases, we compare selected financial information for current and previous years of clients engaged in similar businesses or occupations. From computer generated lists of returns for potential audit, we then choose specific returns.

Most returns are selected in this way. But there are four other common ways of selecting files.

1. Computer-generated lists
   Most returns are selected for audit review from computer-generated lists. For example, the computer system can compare selected financial information of clients engaged in similar business or occupations and generate lists of returns with audit potential. From these lists we choose specific returns to be audited.
2. Audit projects
   In some cases, we test the compliance of a particular group of clients. If the test results indicate that there is significant non compliance within the group, we may audit its members on a local, regional, or national basis.
3. Leads
   Leads include information from other audits or investigations, as well as information from outside sources.
4. Secondary files
   Sometimes we select files for audit because of their association with other previously selected files. For example, if you are in partnership with another client, and that person's file has been selected for audit, it is usually more convenient to examine all the records at the same time.

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