What Gets Requested
Inventory records and reconciliations, cost allocation schedules, payroll registers and time records, purchase invoices, bank records, tracking system exports and the written accounting methodology.
- Trial balance and general ledger detail
- Inventory roll-forward with supporting counts
- Allocation workpapers with documented drivers
- Tracking system reconciliations by period
The Methodology Memorandum
A written memo explaining what is capitalized, why, and on what basis is the single most valuable document in an examination. Update it annually and retain prior versions.
Handling the Process
Route all requests through one coordinator, respond completely and on schedule, keep a log of what was provided, and involve counsel where legal exposure exists.
Regulatory Inspections
Inspections focus on inventory accuracy, recordkeeping and tracking system integrity. Current reconciliations serve both purposes.
Frequently Asked Questions
- How far back can records be requested?
- It depends on the authority and the circumstances. Maintain records for at least the applicable statutory periods and longer where practical.
- What is the most common documentation gap?
- Cost allocations without supporting drivers or contemporaneous records.
- Should we respond to requests directly?
- Route responses through a single coordinator working with your CPA and, where appropriate, counsel, so that responses are complete and consistent.