Preaudit

AAA

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.

INVESTOPEDIA EXPLAINS 'Preaudit'

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.



RELATED TERMS
  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. Audit

    1. An unbiased examination and evaluation of the financial statements ...
  5. Auditor's Report

    Recorded in the annual report, the auditor's report tests to ...
  6. Independent Auditor

    A certified public accountant who examines the financial records ...
Related Articles
  1. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

  2. How To Appeal Your IRS Audit
    Taxes

    How To Appeal Your IRS Audit

  3. Surviving The IRS Audit
    Taxes

    Surviving The IRS Audit

  4. A Look At Accounting Careers
    Personal Finance

    A Look At Accounting Careers

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center