Preparing a construction group for an ATK tax audit

The client, a construction group with several active sites around Prishtina, received notice that the Kosovo Tax Administration (ATK) would audit its VAT and corporate income tax returns for prior years. The returns had been filed on time, but the evidence behind them was scattered: purchase invoices kept at site offices, subcontractor contracts in email inboxes, and reconciliations that existed only for some months.

Construction businesses have transactions that take time to explain: large purchases of materials, payments to subcontractors, advances from customers and the timing of revenue on long projects. Management was worried less about any specific issue than about not being able to show quickly how each number had been built.

Organise before the first meeting

Our team, which includes people who have worked as tax inspectors in ATK's Tax Audit department, started by building an audit file before the auditors arrived. We collected purchase and sales invoices from every site and office, matched them to the VAT returns month by month, and reconciled the returns to the financial statements and the bank.

Find the gaps first

Where documents were missing or numbers did not agree, we identified the issue, traced the underlying transaction and prepared a written explanation with supporting evidence. Where we found an error, we advised the client on correcting it in line with the procedures, rather than waiting for it to be raised.

One channel during the audit

During the audit we acted as the single point of contact for document requests, prepared responses within the agreed deadlines and attended meetings alongside the client's management. Every request and response was logged, so management always knew what had been asked and what had been provided.

Fix the causes

Alongside the audit, we reviewed the internal controls behind the gaps: how invoices travel from sites to the accounts office, who approves subcontractor payments and when reconciliations are performed. We introduced a simple control framework and moved document collection to the client portal.

The audit file was organised and indexed within three weeks, before the first meeting with the auditors. Every request during the audit was answered from that file, through one point of contact.

• Answers on hand. Management could show how each return had been built, with invoices, reconciliations and explanations in one place.
• Issues addressed on the client's terms. Gaps were identified and explained before the auditors asked, instead of being discovered during the audit.
• Controls that last. Site invoices now reach the accounts office every week, subcontractor payments follow a documented approval, and reconciliations are completed and reviewed every month.
• Ready for next time. The company now keeps a monthly file for each closed period, so a future audit starts from retrieval rather than reconstruction.

The outcome of any tax audit depends on its own facts. What preparation changes is how quickly and how clearly a business can explain them.