The first I knew about it was on a Friday when he called and said he would be coming at 9:00 am Monday morning and that he had mailed me a letter. I told him I hadn't received a letter, to my knowledge. At first, I didn't know what he was talking about. I was skeptical about what was going on. He said he was a private contractor working for the insurance company. To make sure I called my insurance agent. I was told that yes they do audits and that it shouldn't be a big deal. And that he will probably be satisfied just to look at my last years business tax return. Well, when I got home on Friday evening, that letter was in my mailbox, so much for a notice. So I called the auditor back over the weekend to ask more questions. I asked him what was going on and what he would need from me. Basically, he said he would need all my records on my business for the past year, not just my tax return. He said the insurance policy year runs different than the tax year. I had felt like I had been singled out but he assured me that about 85% of the policy holders get audited, whether by phone, in person, or by mail. To my understanding, the reason they audit is to see where you are now verses what you told them when you took out your policy. Mostly what they are looking for is how much you use subcontractors and how much you use hired labor. And then, based on what they find, they will adjust it accordingly. Anyhow, I told the auditor that I couldn't have my records ready by Monday morning and that we would have to reschedule another time. Well he was okay with that, so we'll see what happens. This is just all new to me. The auditor said that when you hire a subcontractor or if it's your hired labor, that you're responsible when they are digging and if they hit a utility line. That's the bottom line and what they are concerned about. How much risk your company is to them.