Corporate audits ensure compliance and transparency in financial reporting. For businesses, an audit is a routine process that helps uncover minor discrepancies. However, an audit can also reveal irregularities that go beyond accounting errors. When those findings suggest intentional misconduct, an audit can suddenly escalate into a criminal investigation.
What triggers an audit
Audits are not done randomly. Many industries undergo mandatory audits to ensure compliance with state and federal laws. However, in some cases, unusual financial transactions or inconsistent reporting can prompt auditors to investigate further. The Internal Revenue Service (IRS) frequently audits businesses when tax filings show discrepancies or patterns that suggest underreporting. Agencies may also conduct audits to maintain oversight and discourage misconduct.
How to respond to audit findings
If an audit has resulted in criminal charges against you, the key is to respond with urgency. Consider the following steps to help protect you and your company:
- Secure financial documents, emails, and communications that may be relevant to your defense. Missing or destroyed records can be considered as obstruction.
- Avoid making statements to investigators or regulators without legal counsel present. Even casual remarks can be misinterpreted down the road.
- Conduct an internal review and identify any potential vulnerabilities in your company’s compliance practices. Demonstrating proactive behavior can help mitigate penalties.
- Be cautious about what you say publicly or to other employees. Rumors and speculation can complicate defense strategies and damage reputations.
If you believe an audit may put your company at risk, do not wait for charges and acquire proper legal counsel.
Building a strong legal defense
When facing criminal charges, the most important step is to prepare a legal defense. A strong defense begins with a detailed review of the audit findings, financial records and investigative reports. Many audit findings can be a result of clerical errors or poor recordkeeping. Presenting credible explanations may show that there was no deliberate violation. In some cases, negotiating with prosecutors may help reduce charges or penalties.