The US Government is running a 31 trillion-dollar plus deficit and is unable or unwilling to cut spending or raise taxes in a meaningful way. In these times of burgeoning budget deficits, one way to increase government revenues, with existing resources, is by performing more effective, efficient, and organized compliance audits to collect revenue not properly reported and paid by defense contractors, importers, etc. The author feels a change in focus and philosophy could achieve the results of increased government revenues from compliance audits.
There is a dearth of information related to compliance audits, probably, because there is no central organization/agency in charge of performing compliance audits. Instead, separate federal, state, and local government agencies perform these audits with their own separate management, training and methodology of performing compliance audits. The author is attempting to introduce a novel strategy and plan of action to perform compliance audits with the main objectives of identifying non-compliance with government regulations and collecting unreported revenue. Although the author uses examples from DCAA and US Customs and makes recommendation for property tax audits, the author believes many of his concepts related to compliance audits can be carried over to other federal, state and local agencies performing compliance audits. The general concepts can be used by any auditor.
The book's strategy and plan of action are organized as follows:
Compliance audits are unique as they are adversarial in nature. The compliance auditor is at a huge disadvantage to the company they are auditing due to lack of knowledge of the auditee. As an adversarial audit, author believes a martial philosophy and spirit are necessary to overcome the odds and win.
Focus on the audit objective which includes collecting unreported government revenue and finding non-compliance with govt regulations.
How to put the focus on customer needs and satisfy the customer.
The importance of the audit program which is the "fulcrum" of the compliance audit.
A major focus on risk assessment with a martial approach in order to know the auditee and exploit his weaknesses to identify unreported revenue and non-compliances. You need to understand your adversary's motivations and follow the money! The compliance auditor must be able to see things from every angle .and attack when he/she has the advantage.
Plan, Organize, Execute, Report strategy (POER) was created by auditor. This is an end-to-end strategy to complete successful compliance audits
The author introduces the concept of reported and unreported value
The author also created the concept of preforming Reverse Auditing as an audit strategy, if there are no audit leads/prior audit findings.
How to connect all aspects of your compliance audit to create a stronger more organized workpapers and audit report acceptable to reviewers and customers.
Introduce Loss of Revenue calculation/check to verify correctness of monies you are requesting the auditee to pay.
How to communicate/interact with the auditee. Predict the auditee's response to the audit findings and be prepared to counter-attack, unless the auditee submits.
Tips on compliance audit training and report writing.
Recommendations for the compliance audit industry as a whole.
I have also included a plan to combat trade-based money laundering using existing government resources to possibly help in the fight against Fentanyl.
