We are a bit farther along in the DDS Audit Process. One of the most frequent questions is about the 15% rule for DDS Audits. The rule is complex, but also it does apply. A little study of the actual California State Senate Bill sheds more light on the subject. There are actually two parts to the bill and the later clarifies which funds are affected and not affected by the 15% overhead. The variable is the vendor’s classification and rate codes. It is easier to address each individual case rather than describe each scenario on my blog.
Another common hurdle is vendor record keeping. Many smaller entities have kept manual records. These can range from Excel Spread sheets, to a notebook with entries to a box full of receipts and bills. AICPA Audit Standards require records to be in a standardized format. This allows the audit firm to be audited. All California CPA firms who perform audits and reviews are themselves audited. Acceptable record keeping would be software like QuickBooks, Peachtree, Great Plains. Its best to find software which your CPA or Accountant is already familiar with and has the software in their system.
As an Audit firm we are not able to be proficient in every type of accounting software. Its difficult to initially change over your records, but in the long run you will have better more assessable information and pay less for your review or audit.
Below is a link for IRS audit software requirements
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Use-of-Electronic-Accounting-Software-Records;-Frequently-Asked-Questions-and-Answers
