on-site audit
Definition
An on-site audit is when a government agency, lender, or other organization sends a representative to physically visit your business location to review your records, operations, and practices in person. Unlike a mail or online audit, this one happens at your actual workplace so the auditor can observe things firsthand and ask questions in real time. The IRS, state tax agencies, and even health inspectors all use on-site audits to verify that what you report on paper matches what is actually happening at your business.
Example
If the IRS questions several years of deductions on your tax returns, they may send an agent to your office to physically examine your receipts, invoices, and financial records rather than asking you to mail copies. This gives the auditor a chance to also observe how your business operates day to day.
Watch Out
Before an auditor arrives, you should consult a tax attorney or CPA because anything you say during the visit can be used against you, and having a professional present to manage the conversation can protect you from accidentally volunteering information that creates new problems.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.