Audit Day at Tayler Corporation
The text on my phone said UTAH DEPT WORK, so I answered it. That was how I discovered that our business had been randomly selected to be audited by the Utah Department of Workforce Services. They wanted to check our finances to ensure that we were paying necessary unemployment insurance on all our employees. The woman on the other end of the line was very pleasant. She introduced herself as Jan and explained the process we’d go through. She even cracked a conversationally-appropriate joke. We set up an appointment for the following week.
I used to live in terror of audits. I feared that the IRS would swoop down on us, tell me that I was doing all of the accounting wrong, and then demand lots of money which we couldn’t afford to pay. My fears were born of my inexperience at accounting. I’d learned it all on-the-job. I’d made huge organizational tangles and then had to untangle them. Those fears only faded after years of annual tax visits with a certified accountant who assured me that my bookkeeping was just fine. It was a measure of my acquired confidence that the word “audit” did not send me into a panic attack.
Jan sent an email with a full list of the things she needed to see for the year 2010: payroll records, w-2s, w-3s, 940 & 941 forms, 1099 forms, income tax returns, a check register, and a general ledger. I scanned the list and knew exactly what each item was, where it was filed, or how I could make my accounting software spit it out for me. Collecting everything would have taken less than an hour, except that the general ledger was 378 pages long and took a while to print.
On the appointed day, Jan arrived at my house. She entered with a pleasant air of competence. I had no doubt that she was fully capable of getting hard-nosed if she needed to be, but she was starting at friendly and hoping to stay there. We sat at my kitchen table. Jan pulled out her computer and began setting up. She apologized because she was wearing a bracelet with a bell on it.
“It looked so cute and pretty when I bought it. I had no idea that the sound was going to drive me crazy.” Jan held up the tiny bell so I could see it. “I’m going to have to get wire cutters and clip it off.”
“We have wire cutters!” announced Gleek, who’d been attracted by the jingling noise. Gleek darted to the garage and fetched the clippers. So I clipped the bell off the bracelet, and Jan gave the bell to Gleek who ran off happily. Jan and I smiled at each other and the real work began.
There was a little awkwardness at first. I knew I needed to be available to answer questions for Jan, but mostly she just needed to look at the papers I provided. I didn’t want to hover, but I couldn’t leave the room. After about 10 minutes I found a good solution and used the time to hand sew some of Link’s scout badges onto his bandoleer. Jan and I chatted a little as she worked. She was interested in Howard’s job as a cartoonist.
“I admire creative people.” Jan said. “I can’t draw a straight line with a ruler.”
Some of our discussions were more to the point. I explained why we pay Travis Walton, that he is a professional artist with his own business and he contracts work from lots of different people. This satisfied her that he was in fact a contractor rather than someone who should be treated as an employee. Several other names came up and I explained who they were and what we had paid them to do. I was honest in my replies. Not only is honesty the best policy, but this was a chance for me to make sure that my definition of “employee” matched the state definition. Jan was never accusatory in her questions, she just needed to sort information appropriately.
“That’s it.” Jan said as she closed her computer. “I’ll write up your report and send you a copy via email. It’ll all be zeros, because you’re good.”
Howard happened to be in the room to hear this announcement. He asked, “Out of curiosity, on a scale of one to ten, how did we do on providing the information you needed?”
“With one being the hardest and ten being the easiest, I’d say you guys were an eleven.” Jan answered with a smile. Then with a little prodding from us she told a couple of stories about difficult cases. She told outlines only, without names or identifying details. She left us with a card and encouraged us to call her if we have any questions about state tax laws. Then she walked out the door less than 45 minutes after she walked in.
The whole experience was interesting and pleasant. It was nice to be reassured that we are, in fact, running our business correctly. However even if we’d been making mistakes, Jan would have been happy to help us sort them out. This is the auditors job: to make sure things are being done properly and, if they aren’t, assist in getting things corrected. An individual auditor may be grouchy, cross, or on a power trip; but their intended purpose is to help, not to punish. I don’t want to be audited, but I’m not afraid anymore. This audit did cost me a few hours of time, but on the whole the process was interesting and pleasant rather than otherwise.
Audit Day at Tayler Corporation Read More »