DEFINITION of 'Preaudit'

An accounting practice used prior to the official examination of the accuracy of an organization's financial statements. This preliminary phase of an audit is used to establish the scope of the audit and any special areas of concern. It is also used to gather background information and to request needed documents, records and information. A preaudit may be conducted in the form of a written questionnaire that the auditor gives to the auditee.


A preaudit is also a phase in which an IRS agent examines a tax return that has been selected for audit. Prior to beginning the audit, the agent must check the statute of limitations for the return, review the return, determine the scope of the audit, establish contact with the taxpayer, make an audit appointment with the taxpayer, explain to the taxpayer his rights and get him to sign form 2848, Power of Attorney and Declaration of Representative.

  1. Unqualified Opinion

    An independent auditor's judgment that a company's financial ...
  2. Form 2848: Power of Attorney and ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
  3. Unqualified Audit

    Also known as a complete audit. An audit that has been performed ...
  4. Accountant's Opinion

    A statement signed by an independent accountant outlining his ...
  5. Auditor's Opinion

    A certification that accompanies financial statements and is ...
  6. Qualified Opinion

    A statement written upon the front page of an audit done by a ...
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