Study Shows IRS Audits Increase Business Compliance

By Frank L. Brunetti on November 5th, 2012

Companies that are fearful of audits tend to be more compliant with federal tax law and financially responsible, a new survey reveals.

New research appearing in the American Accounting Association’s journal, Accounting Review, found that a decline in the Internal Revenue Service’s business auditing correlates with less federal taxes being paid to the government. In addition, corporations that run a higher risk of being audited may be more likely to report more accurate information in public financial statements, which could be a positive sign for shareholders.