Multistate Audit Technique Manual

CALIFORNIA FRANCHISE TAX BOARD Internal Procedures Manual Page 1 of 38Multistate Audit Technique Manual _______________________________________________________________________________ 3500 GUIDELINES FOR AUDITING UNITY Unitary examinations are, by their nature, very fact intensive. Furthermore, the facts and circumstances will be unique in each case and even the relevance or weight attached to a particular unitary factor will vary in each case. This environment has several implications for the auditor. First, it is essential that the auditor and the supervisor make a judgement as to whether the potential deficiency or overassessment will justify the resources that will be necessary to adequately develop and support the unity issue. Second, the auditor must obtain a good overall understanding of the taxpayer's business before focusing on the details of the unitary relationships so that questions and information requests can be tailored to the specific taxpayer. Finally, the auditor must be prepared to present all of the relevant facts objectively. The importance of unitary factors may only be put into perspective when viewed in conjunction with the overall activities of the business. Therefore, to prevent the taxpayer from altering the unitary perspective at the protest or appeal level by presenting additional facts that were not rebutted at audit, the complete picture needs to be presented and explained in the audit report. Reviewed: ...