The future of the small business audit: new regulations, new perspectives.

AuthorCytron, Scott H.

Although the economy seems to be on the rebound, businesses of all shapes, sizes and geographic diversity still feel the need to hold back in this age of instability--everyone feels a need to assess the practicability of each situation or activity, and keep expenses to a manageable level.

**********

Spending decisions may, indeed, be influenced by the economy, but they may also be a by-product of other social and environmental situations, including a lack of available talent, outsourcing services to foreign countries, importing goods and products from less expensive sources, and even the speculation associated with the 2004 election year.

[ILLUSTRATION OMITTED]

While firms and businesses find ways to manage their resources, the viability of the small business audit has risen to the surface. Certainly, businesses will continue to have reviews and compilations performed, but how important is the audit for today's small business?

Joseph Anthony, in Money Matters on Microsoft bCentral, writes that small businesses and self-employed business owners will continue to be the target of more scrutiny, thanks to the Internal Revenue Service's new Small Business/Self-Employed Operating Division. This Division will focus on partnerships and sole proprietors with more than $100,000 in total gross revenues, and small corporations with less than $5 million on their balance sheets. In addition, Congress has approved an increase in funding that the IRS is going to use to try to increase the number of audits conducted.

If the IRS continues to weight heavily on small businesses with respect to tax, then is it logical that the audit also will become a necessary task so that a business can project a more accurate image?

"Whether the small business audit is effective depends on its purpose," says Laura A. Hay, CPA, vice president of finance and technical services for The Ohio Society of CPAs. "In many cases, the auditor is the company's only advisor, so his or her recommendations and counsel would go above and beyond the main scope of the audit in helping the owner guide the business."

The audit will no doubt get more complicated in the next few years based on the requirements of the Sarbanes-Oxley Act of 2002 (SOX), in which the PCAOB (Public Company Accounting Oversight Board) is writing its own set of auditing standards rather than adopting the ones already in place. It's true that only public companies will have to adhere to the PCAOB standards, but many...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT