Testing Internal Controls
IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis) · 2026 edition · updated 2026-07-29 · United States
The taxpayer's internal controls should be tested by "walking through" representative transactions, including physical observation when transactions are recorded:
Select different types of transactions,
Look for consistency in recording similar or repetitive transactions, and
Identify points where existing internal controls could be compromised.
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