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Should You Give the Auditor a Plant Tour?

author photo of Lauren Stinson

You are going through an audit and the auditor has just requested a plant tour. Should you say yes?

Even though you may be reluctant to give the auditor a plant tour, it is an important step in the audit process. In fact, you probably don’t have a choice. Refusing to walk your auditor through your facility sends up too many red flags.

The plant tour is beneficial because the auditor can become familiar with your manufacturing process and learn important information such as when the manufacturing process begins and ends, what machinery is on the manufacturing line, and what these machines do to the product being produced. Remember these tips:

  1. Limit the amount of people that talk to the auditor during the plant tour. If one person knows the entire manufacturing process, allow that person to escort the auditor through the plant. Also, make this person the point of contact for any questions that the auditor may have during the audit process.
  2. When the auditor asks questions about what a piece of equipment does, answer the question as straightforward as possible. Do not offer additional or unrelated information. Some plant employees want to share all of their knowledge about the equipment and the plant, but this may open up a can of worms.

By limiting the number of people who talk to the auditor and keeping answers straightforward, the plant tour provides your auditor with valuable information that can speed up the audit process and may even reduce your assessments.

Have you ever regretted giving an auditor a plant tour? (Was it because you didn’t follow these tips?)

How has a plant tour benefitted you during an audit?

Your comments and/or questions are welcomed below.

About the Author: Lauren Stinson, CMI, is Owner and President of Windward Tax, a sales and use tax consulting firm. She has more than 20 years of experience working with manufacturers on sales and use tax issues. Lauren is pleased to share her expertise with SalesTaxSupport readers. She is the Manufacturing contributor for SalesTaxSupport’s Industry blog and she is the Georgia Sales Tax contributor for SalesTaxSupport’s State blog. Feel free to contact Lauren at lstinson@windwardtax.com or 770-696-4145 (ext. 215) - or submit a consultation request on her Firm Profile page.

Other recent “Manufacturing & Distribution” posts by Lauren Stinson, CMI:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.

Comments

3 Responses to Should You Give the Auditor a Plant Tour?

  • Posted by Tom on February 9, 2016 11:56am:

    Great post Lauren...I'm always the guy standing behind the auditor frantically shaking his "no" as the plant mgr., production supervisor or engineer keep talking and talking about the production process or a particular piece of M&E.

    I like scheduling a pre-tour with those guys before the auditors arrive, so I can see things beforehand and get a feel for what the auditor may ask. This way, we can walk through the potential questions and answers and make sure our team is on the same page.

  • Posted by Jay on January 22, 2016 1:00pm:

    Yes, I agree. Being a past WI sales auditor we often looked to talk with individuals on the floor to explain a machine or specific process. Besides the contact who was provided by the company to guide us on the tour; who knew what and what not to say to us when we were there. Employees on the floor, often as you said, liked to perhaps gave additional or too much information that made me (the auditor) often question if it this piece of machinery or equipment did fall within the “direct” and “exclusive” requirement needed to be exempt.

    • Posted by Author photo of Lauren Stinsonlaurenstinson on January 28, 2016 11:53am:

      Thanks for the comment, Jay. Many former sales auditors I know, including the ones who work at my firm, have had similar experiences. A plant worker’s comment can inadvertently sends up a red flag to the auditor. No one is trying to keep information from the auditor. However, explaining equipment use as it pertains to sales tax regulations is complex and should be addressed by one company contact.

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