audit-risk-benchmarking

name	audit-risk-benchmarking
description	Compare entity financial ratios against ATO small business benchmarks to assess audit probability

Audit Risk Benchmarking Skill

Compares a taxpayer's financial ratios (expense/income, labour costs, rent, motor vehicle) against ATO-published small business benchmarks for their ANZSIC industry code. Generates a risk profile without recommending behaviour change.

When to Use

• Assessing ATO audit probability before lodgement
• Identifying expense ratios that deviate from industry norms
• Preparing documentation for items outside benchmark ranges
• Pre-engagement risk assessment for new clients
• Annual compliance health check

Key Principle

ATO benchmarks are DESCRIPTIVE, not NORMATIVE. Being outside a benchmark is NOT illegal. This skill assesses probability, never recommends adjusting legitimate figures to match benchmarks.

Benchmark Ratios

Ratio	Calculation	Source
Cost of sales	Cost of sales / Total income	ATO Small Business Benchmarks
Total expenses	Total expenses / Total income	ATO Small Business Benchmarks
Labour costs	Wages + super / Total income	ATO Small Business Benchmarks
Rent	Rent expense / Total income	ATO Small Business Benchmarks
Motor vehicle	Motor vehicle / Total income	ATO Small Business Benchmarks

Engine Reference

• Engine: lib/analysis/audit-risk-engine.ts
• Function: assessAuditRisk(tenantId, financialYear, options)
• Output type: AuditRiskAssessment — includes risk factors, benchmark comparisons, and recommendations
• Database: audit_risk_benchmarks table stores cached benchmark data per industry code and FY

Data Sources

• ATO Small Business Benchmarks: ato.gov.au/Business/Small-business-benchmarks
• ATO Compliance Focus Areas: Published annually
• Industry codes: ANZSIC 2006 classification

Legislation

• TAA 1953, s 263-264 — ATO access and information powers
• TAA 1953, s 8C — Record keeping obligations