BASIC AUDIT QUIZ

You have just received a notice from the tax authorities informing you that your business will undergo a tax audit. What steps will you take to prepare for this audit and ensure compliance with tax regulations?

• Gather all relevant financial records, organize documentation, review tax laws and regulations, seek professional advice if necessary, and cooperate fully with the tax authorities during the audit process.
• Hide or alter financial records to avoid scrutiny
• Refuse to cooperate with the tax authorities
• Ignore the notice and continue with business as usual

During a routine tax audit, the tax authorities have identified discrepancies in your client's financial records. How would you advise your client to address and resolve these discrepancies to mitigate any potential penalties or consequences?

• Seek professional advice and work with tax authorities to reconcile discrepancies
• Ignore the discrepancies and hope the tax authorities won't notice
• Blame the discrepancies on a former employee or accountant
• Refuse to cooperate with the tax authorities and deny any wrongdoing

Your client has been selected for a tax audit, and you suspect that certain financial transactions may not have been accurately reported in previous tax filings. How would you approach and rectify this potential issue to ensure compliance with tax laws?

• Consult with a tax professional and accurately report the financial transactions in the current tax filing.
• Seek advice from a non-professional acquaintance
• Conceal the financial transactions to avoid further scrutiny
• Ignore the potential issue and hope it goes unnoticed

As a professional tax consultant, you discover potential inconsistencies in a client's tax returns while conducting a preparatory review before an upcoming tax audit. How would you address these inconsistencies and advise your client to effectively navigate the audit process?

• Ignore the inconsistencies and hope they don't get noticed during the audit
• Thoroughly review the client's records, identify errors, advise the client to gather necessary documentation, and be transparent and cooperative during the audit process.
• Advise the client to hide or destroy any incriminating evidence
• Tell the client to be uncooperative and withhold information during the audit

Your client has been notified of a tax audit, and you recognize potential areas of exposure or non-compliance in their financial records. How would you work with the client to rectify any issues and ensure they are adequately prepared for the audit process?

• Ignore the potential issues and hope they don't come up during the audit
• Pretend the audit is not happening and continue with business as usual
• Blame the client for any non-compliance and refuse to help rectify the issues
• Review the financial records, identify potential issues, and work with the client to rectify any non-compliance.