When it comes to insuring yourself & your business for the accounting costs of ATO or statutory audits, there is a common belief that Audit insurance policies are fairly generic.
Well, they are similar … in the same way a Corolla and a Ferrari are similar. Sure, both have four wheels and an engine, but that’s about where the similarities end! Audit insurance policies vary greatly in the scope of what and who they cover.
At a time when our national budget deficit is driving an increase in ATO audit activity, it is smart to review what the costs of an audit could be to your business and then consider what an insurance policy should cover you for. The Shield Insurance team has been updating its research, talking to insurers about the finer points of audit policies and how they are underwritten. Of the many policies available to cover you for the financial costs of an audit, we have noted stark differences in:
WHO is covered – some policies cover only the company or the single ABN holder, while others cover all associated companies, directors, trusts and trading entities with common ownership.
WHAT is covered – we see policies that cover only ATO audits of a very particular nature (eg GST), through to those that cover a range of burdens imposed on you by the ATO or state revenue organisations (including audits, investigations and inquiries).
Be aware there are Brokers in the market attempting to bundle multiple ABN holders, trusts & individuals under a single Audit policy. This is contrary to the insurers’ underwriting guidelines – we don’t like your chances of getting that cover granted.
Audit insurance policies are far from generic, and the financial impact of an audit can be severe. We have a saying at Shield – “Everything is fine until something goes wrong!” Make sure you’re appropriately covered.
To understand the costs of an audit in your business and determine whether your current audit cover is appropriate, please call a member of the Shield Team and book a no-obligation discussion.
(PS No offence to Corolla drivers – we think they’re great cars!)No Comments »