Audit Shield – Peace of mind protection should Inland Revenue come calling

  • Wellington-Profile-web

    Audit Shield advocates (from left), Bahadur Kaikobadi, Abbey Warner and Bruce Stormer believe peace of mind is valuable for business.

Audit Shield – Supplier Profile

 

Providing value for money is one of our key drivers at Moore Stephens Markhams Wellington. As well as our core service of business advice, we work to identify ways our clients can benefit from doing business with us.  Our provision of Audit Shield is just one such way.

 

Many people take out travel insurance on the off-chance that, should anything unforeseen occur while travelling, any associated costs or losses are covered. Likewise in terms of obtaining peace of mind, Audit Shield is an insurance policy for business owners. It protects the business against unplanned professional fees incurred as a result of Inland Revenue instigating audit, review, enquiry or investigation activities, should the business be randomly selected.

As holders of a master policy, Moore Stephens Markhams Wellington can provide cover to our clients against the ramifications of this audit activity and each year we send out an invitation to clients to consider this.

IR audit activity is increasing with more emphasis being given to areas such as the ‘cash economy’; the high volume and high speed cash transactions of the hospitality sector; and industries that have complex financial reporting such as the construction industry where retentions are retained until the job is completed, potentially across a number of tax years.

Simple things like changing a GST period can flag official IR audit activity. “In fact, anything out of the norm raises a flag in the IR system,” says Bruce Stormer, Wellington director.

“We’re not suggesting that businesses are intentionally doing anything wrong. The IR’s business self-assessment process is becoming increasingly more comprehensive and may cause questions to be asked and a business will need to provide documentation to show how it derived the amounts submitted.

“This can take a lot of time and oftentimes, an accountant or other advisor is called on to help prepare the supporting documentation and attend discussions with the department along with the business owner. These costs would be covered by Audit Shield,” says Bruce.

“Many SME business owners just don’t have extra time available to research and compile what’s needed to satisfy the IR requirements as a result of the audit activity, and the burden of proof is on the taxpayer to do this. It’s not up to the IR to prove a business is wrong.”

Bahadur Kaikobadi, who is the operations manager for Audit Shield in New Zealand, suggests that a premium for a business with a turnover of less than $500,000 could provide up to $11,000 worth of cover to pay for accountants, lawyers and other specialists as and if required. The cover is retrospective, so previously lodged returns are also covered.

Bahadur cites the example of one Audit Shield policy holder who “well and truly saw value for their investment”.  Inland Revenue undertook a Client Risk Review of this client, which later progressed into a full audit. A claim payment of $9,664 was made at the conclusion of the whole review and audit process, which was completely covered by Audit Shield.

“Clients of Moore Stephens Markhams who opt into our Audit Shield Master Policy enjoy the assurance of protection in the event of audit activity by Inland Revenue,”says Bahadur.

The offer to take up the insurance is simply that; an offer, says Bruce. “We take the view that it’s a service we can provide, we’re not selling it; it’s up to each business owner to decide if it’s right for them.”

www.accountancyinsurance.co.nz

Published Winter 2016

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