IRS auditors are requesting a backup copy of taxpayer's QuickBooks file

The IRS has purchased QuickBooks licenses and installed the program on computers at various sites where they do income tax return audits.  The IRS is requesting a back up copy of the firm's QuickBooks along with the other typical information like bank statements and copies of expense receipts.  The IRS uses the extracted information from the QuickBooks to calculate sales and expenses.  For example is the amount reported as sales on the state sales tax return consistent with the amount of sales reported on the income tax return.  One area that the IRS is looking at is the Undeposited Funds account in the QuickBooks.  Several IRS auditors have looked at the undeposited funds as unreported sales that the business owner is trying to hide.  Most of our QuickBooks clients don't clear the undeposited funds account when they make their bank deposits.  The second part of the entry for the bank deposit is to clear the undeposited funds account so it doesn't appear that the business is not depositing all their sales.  Might be a good time to have KatTax review your QuickBooks on a monthly basis to make sure all the accounting entries are going through properly.