Auditing Fundamentals

Audit Flowchart Timelines

Alternate Text for Audit Flowchart Timelines

  1. Audit Select generates audit
  2. Audit assigned to audit group
  3. Audit assigned to auditor; letter of routine tax audit and audit questionnaire is sent to taxpayer
  4. Questionnaire received by auditor
    • If the original questionnaire is not received within 30 days, a follow-up should be sent by certified mail. (Also, try contacting taxpayer by telephone if the number can be obtained).
  5. Pre-audit research
  6. Contact taxpayer
    • If taxpayer asks to delay audit, a statute extension agreement should be obtained, if necessary.
      Contact should be made within 30 days of receiving the audit questionnaire. If an appointment is not set, a written follow-up is required within 45 days, and every 45 days thereafter, until an appointment is set.
  7. Entrance Conference
    • Statute extension agreement can also be discussed at this time if taxpayer indicates that more time is needed to obtain records.
  8. Audit field work begins
    • Sampling: Issue Notification of Sampling Procedures, usually after preliminary testing of 25% of the sample.
  9. Provide audit schedules to taxpayer
  10. Give taxpayer a reasonable amount of time to obtain additional information
  11. Review information provided by taxpayer
  12. Adjust schedules as necessary
  13. Provide revised schedules to taxpayer
  14. Hold Exit Conference
    • If a payment is received, complete the Sales and Use Tax Payment Entry Form, #(01-485).
    • Inform taxpayer of Penalty Waiver recommendation. If denied, taxpayer may request a meeting with the audit manager, request a Independent Audit Review Conference, or seek redetermination.
    • Give and explain the Contesting Disagreed Audits brochure to the taxpayer.
    • If taxpayer disagrees with audit results, offer a Reconciliation Conference and/or an Independent Audit Review Conference.
  15. Complete audit (Audit write-up)
  16. Turn in audit for supervisor review
    • Audit is returned to auditor if corrections are necessary.
  17. Audit supervisor makes a cursory review of audit and submits it for audit manager review and penalty decision
    • Audit is returned to auditor if corrections are necessary.
    • Audit Manager reviews audit and submits it to the Regional Processing Center for review and processing
  18. Audit is returned to auditor if corrections are necessary.
  19. Audits should be sent to the RPC no later than six weeks prior to expiration of statute.
  20. Certificate of No Tax Due Audits should be sent to the RPC no later than 11 days prior to due date.
  21. Amended Audits (03-Assignment Codes) should be sent to the RPC no later than two weeks before due date.
  22. Processing Center Reviews Audit
    1. Minor errors are corrected by the RPC
    2. Audit is returned to auditor if major corrections are necessary. Auditor should make corrections and return audit to the RPC as soon as possible.
  23. Letter of Audit Results, and Texas Notice of Tax Due, including Audit Schedules, are sent to taxpayer.
    • Copy of audit is returned to the Audit Office.
    • Once the audit is returned to the Audit Office, the auditor has five working days to review the completed audit.

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(Revised 10/2021)