When a company or Government Department wants to check and inspect the accounting books of a company. They need to make a formal request or demand to the owner and the members of board of directors of that company. The key reason of writing this letter is to inform the accountants of that company that a particular person or department wants to inspect their accounts. So they need to produce them and fully cooperate with the demanding person. Another reason of writing this demand letter is to explain the reason why a person or a government department wants to inspect the records of the company.
Brief Description of Inspection Demand Form:
So lets see what situations leads to a possible inspection of the financial conditions of a company. First one, if a company is inviting new partners to invest in the business as general partners. Hence anyone desire to invest wants to investigate first. Mainly as if the company is capable of making the profit that the owners are claiming. And weather the company pays the taxes or not.
This is all done by investing or inspecting the account related books i.e. ledgers and journals of that company with record files that include financial transactions and money flow.
Another situation is in which partners are going to make an important decision. This can be including a new partner, terminating an existing partner or dissolving the entire business. Before they do so, they need to inspect the books and records to see what the turnout of the company is. How much money they have made from their investment in the business?
These situations are very common and companies deal with them on regular basis but there are also some situations when companies don’t appreciate showing their books to other people i.e. doing joint business venture with another company or dealing with taxation departments. When a company wants to conduct a joint venture, both companies are legally obligated to show their financial records to each other but they don’t appreciate it where on the other hand, if there is a tax related dispute or fraud, the tax department has the right to demand the inspection of the books and records of any business either the owners and partners appreciate it or not.
Key Elements in the Inspection Demand Form:
- Name of the person or authorized department who is demanding the inspection
- Date when the letter is sent to the corporation
- Duration in which the corporation is required to reply to the demand
- Name of the corporation with trademark and registration name
- Name of the directors and shareholders in the corporation
- Detail of the purpose(s) for demanding the inspection
- Details of authority of the person for demanding the inspection and obligation of the corporation to respond to the demand
- Duration in which the person or department will complete their inspection
- Details of the books, ledgers and records required by the demanding person
- Signature of the person who is demanding the inspection
Here is preview of a Free Fillable Inspection Demand Form (Corporate Books and Records),
Here is download link for this Inspection Demand Form (Corporate Books and Records),