When getting the last three years of tax returns from a place, how do you ensure their accuracy?
I have heard mention of getting them “audited.”
What does that mean exactly?
How do you know the previous owners are not inflating their numbers to make the deal sound more appealing?
You can not audit someone else's financial tax returns or their net worth statement! There is nothing provided to support or dismiss the numbers written.
It is an individual who chooses to provide to their own accounting firm the paper and receipts to support their position and pay to have a certified tax return and financial statements created through a audit provided by companies like PWC, RSM or KPMG. Actually any certified public accountant can do a certified return, the more money you have the bigger the accounting firm.
Normally a real estate owner may provide a schedule to show their income / expense but in a case of multiple properties that schedule may be consolidated and the supporting document might be an addendum.