Audit on Behalf of the Representative of a Deceased Partner
The line of action by the auditor in such a case will be the same as in the case of an auditor appointed on behalf of a retiring partner. The purpose of an audit representative is to develop the optimal approach to advocate on behalf of the taxpayer. The deceased partner might have died during the course of the financial year and, therefore, the question of computation of the profit or loss, up to the date of death arises. The PR has the sole authority to act on behalf of the partnership in agreeing to settlements, notices of final partnership adjustments, and making partnership elections in regards to audit adjustments. Profit or loss may be calculated on the basis of the average profit or loss of the previous year or the books of accounts may be closed on the date of the death of the partner and Profit and Loss Account may be prepared up to that date. But which course should be adopted? For this, the auditor should refer to the terms of the agreement. No other partner or person may participate in an audit examination or proceeding involving the partnership without the permission of the IRS.
The auditor should also see that correct amounts are charged to revenue account so that the interest of the deceased partner is not sacrificed. Finally, the auditor should see that the account of the deceased partner is correctly debited and credited and thus find out what amount is due to such partner. They help the taxpayer to prepare all requested documents, and they generally handle all correspondence on behalf of the taxpayer, including attending required meetings. The auditor should also find out from the Partnership Agreement as to how the amount due to the representative of the deceased partner is to be paid and advise the representative accordingly.