The accounts audit of the company
Has your company received an accounts audit notice? This is the in-depth review of the company, in principle carried out on site, comparing the returns with the accounts and supporting documents. The procedure is governed by precise safeguards, whose observance conditions the validity of the reassessment. It is the reference audit for companies required to keep accounts. The firm assists you from the notice through to litigation.
- Purpose
- On-site review of the company’s accounts (French Book of Tax Procedures art. L. 13)
- Notice
- Prior audit notice + taxpayer’s charter (LPF art. L. 47)
- Duration
- Limited to 3 months on site for small businesses (LPF art. L. 52)
- Safeguard
- Oral and adversarial discussion; no second audit of the same period (LPF art. L. 51)
- Profile
- Companies and entrepreneurs required to keep accounts
What is an accounts audit?
The accounts audit (French Book of Tax Procedures art. L. 13) is the in-depth review, carried out on the company’s premises, which consists in comparing the returns filed with the accounts and the supporting documents. It targets companies and entrepreneurs required to keep accounts, for which it is the reference audit.
It opens with the sending of an audit notice (LPF art. L. 47), accompanied by the charter of the audited taxpayer, and gives the company time to be assisted by the adviser of its choice. Its course follows a precise framework, whose observance is enforced.
Safeguards whose observance is enforced
The validity of the audit depends on the observance of precise safeguards:
- Prior notice and charter: the company must be informed and given time to organise itself (LPF art. L. 47);
- Oral and adversarial discussion: the auditor must engage with the company on site, and not confine themselves to a one-sided review;
- Governed duration: for small businesses, the on-site presence is limited to 3 months (LPF art. L. 52);
- No renewal: once a period has been audited, the tax authorities may not in principle carry out a further audit of the same entries (LPF art. L. 51).
Failure to observe a substantial safeguard renders the procedure irregular and leads to the discharge of the corresponding taxes: this is a leading line of defence.
Points to watch
On the merits, reassessments often concern the rejection of the accounts (accounts deemed unreliable, opening the way to a reconstruction), the deductibility of expenses, VAT, abnormal act of management and income deemed distributed. On form, attention focuses on the reality of the oral and adversarial discussion, compliance with the duration, and the reasoning of the adjustment proposal. Form and merits are defended together.
Our support
The firm intervenes as soon as the audit notice is received: preparation of the audit, organisation of the discussion with the auditor, monitoring of the observance of the safeguards, then the response to the adjustment proposal, hierarchical appeal, referral to the commissions and litigation. It combines the defence of the validity of the procedure with that of the merits (expenses, VAT, reconstruction, distributions), and negotiates, where appropriate, an ex gratia relief or a settlement.
Accounts audit: your questions
What is the difference with an accounting examination?
The accounts audit takes place on site, on the company’s premises (LPF art. L. 13). The accounting examination, by contrast, is carried out remotely from the file of accounting entries. The safeguards differ in part.
How long does the on-site audit last?
For small businesses, the auditor’s on-site presence is limited to 3 months (LPF art. L. 52). Exceeding this duration, where it applies, renders the procedure irregular.
Can the tax authorities audit the same period twice?
In principle no: once the accounts of a period have been audited, the tax authorities may not carry out a further audit of the same entries (LPF art. L. 51), save for limited exceptions.
What is the oral and adversarial discussion?
It is the safeguard under which the auditor must engage with the company during the audit, and not confine themselves to a one-sided review. Its absence may render the procedure irregular.
Should you be assisted from the audit notice onwards?
Yes. A lawyer’s involvement from the notice allows the audit to be prepared, the discussion to be organised, the observance of the safeguards to be monitored and the defence on the merits to be built. Exchanges are covered by professional secrecy.
An accounts audit under way?
A confidential initial consultation to prepare the audit, monitor the observance of the safeguards and organise the defence on the merits.
This page presents the accounts audit for information purposes; each case calls for a specific analysis. References to the French Book of Tax Procedures in force at the date of writing.