A lot of business owners think they’re safe just because they haven’t been audited yet. We show you why this assumption is false.
Back in the day it used to be much easier to keep your company audit-free. Before records were kept digitally it took a lot more manpower to track down errors and enforce the law down to a T. However, today most record-keeping is become digitized. This only increases the need for keeping accurate Acquisition and Disposition records, as well as the other recommendations from the Gun Control Act.
A lot of business owners continue with outdated record-keeping practices, or rely on non-compliant software, for the simple fact they haven’t been audited yet.
But, just because you haven’t been audited yet, doesn’t mean you’re safe. Below we dive into why you need to be proactive with your record-keeping, and why the lack of an audit doesn’t mean you’re doing things correctly.
Understanding the Auditing Process
Even if you’ve been diligently keeping your books for years, an audit could still be in your future. Think of an audit as a way for the government to ensure that things are staying on the right side of the law. An audit isn’t inherently a bad thing, but it can really trip up your business if your record-keeping isn’t up to the latest compliance standards.
Why Would I Get Inspected?
There are numerous reasons you might get selected for a compliance inspection, but some of the most common are listed below:
- You’re in the same geographic vicinity as other businesses who are being inspected.
- It’s been a long time since you’ve undergone inspection, or you haven’t been inspected in the first place.
- You already received a warning letter the previous year, and they’re checking in to see if you’ve implemented the suggestions.
- You’ve recently sold a large number of firearms.
- You’ve sold firearms that law enforcement has traced for some reason.
As you can see, there are numerous reasons for an inspection to occur, one of them being, if you haven’t been audited before. No one is free from compliance inspections, even if you think you’re doing everything right.
What Are They Looking For?
Investigators are looking for a certain level of compliance to the Gun Control Act. The main things they’ll be looking for are as follows:
- Your acquisition and disposition book, which will include the verification of all firearms sold and purchased.
- Your overall transaction record.
- Any reports of theft or loss.
- Your reports of multiple gun sales or disposition records of pistols and revolvers.
Your Disposition and Acquisition records are incredibly important, as they will be compared against your entire inventory. Sometimes, your entire inventory will need to be examined to ensure there are no discrepancies, so be prepared.
Why You Must Be Proactive, Not Reactive
If you find yourself scrambling and reacting to an audit, then it’s already too late. However, it’s important to keep in mind that the ATF will not revoke an FFL license just because they feel like it.
It usually takes multiple strikes before they either revoke, or decide not to renew your license. The main goal of the audit is to help you take note of problem areas that need fixing. If you’ve been using proper documentation methods and everything checks out, then hopefully you won’t have much to fix.
Defense is the best offense when it comes to protecting your business.
But ignore any warnings that you might receive at your own peril. If you’re one of the lucky ones who hasn’t been audited yet, just remember, the best offense is a good defense. By ensuring all of your records are in alignment, you decrease your chances of an audit negatively impact your business.
Preventing Common Violations
One of the most common violations has to do with maintaining the entries in your Acquisition and Disposition records, also known as your “bound book”. This occurs for two reasons. One, you’re entering the information incorrectly by including typos, or forgetting crucial information. Two, it occurs because you don’t enter the information in a timely manner.
When it comes to your bound books there’s no such thing as “doing it later”. For that reason it’s important that you have a set of processes for keeping your records up to date. One of the easiest ways to get over this hurdle is to utilize bound books software to streamline the process for you.
If you’re in the gun business, then you’re basically guaranteeing you’ll be audited at some point. The question is, will you be ready? By using our software at FastBound you’ll be able to handle anything that comes your way, while simplifying your business processes. Why don’t you give our software a try today?
