In case you didn’t know, the manufacturers’ auditors are still alive and well and making house calls at dealerships all across the country. You may not hear much about it, but they are smarter than ever and have ‘intelligence’ that tells them where to go, when to go, and what to look for when they get there. Even when the random rule i.e. “never been there, so let’s go” is used, a visit from them still has the same impact—money out of your pocket! Money that should have gone to your bottom line.  
There are several things a dealership can do to stay off the auditors’ radar or in the event of an audit to help lessen the sting. Here are a few tips:
Staying off the radar
1.    Report all deliveries accurately and on time (not the last day of the month) and know the definition of a valid delivery.
2.    Keep delivery changes and cancellations to a minimum; do it right the first time.
3.    Do not abuse incentive programs. Know what your sales staff is doing. Qualify customers’ eligibility, obtain and validate all required documents and certificates at the point-of-sale. Management should review and approve all deal jackets and supporting documentation beforehand.  
4.    Do not advertise or offer any questionable discounts or give-a-ways to your manufacturer’s employees without knowing all the rules and guidelines. Auditors read the newspapers. If you are not sure, contact your manufacturer’s representative.
5.    Do not sell to exporters or brokers; know your manufacturer’s policy regarding such sales. Review the list of known exporters, if your manufacturer publishes one.
6.    Know the difference between fleet and retail, then report properly.
7.    Treat all mail-out audits seriously; the results could cause a full, in-dealership audit.
Note: Regular, quantitative (large percentage), and in-depth reviews of deal jackets to ensure compliance should be a normal business practice in your dealership.    
During the audit
1.    Be involved; attend all meetings, if possible.
2.    You should have an opportunity to resolve any questionable issues during the audit.
3.    At the closing, instructions should be provided regarding where to send additional information and the deadline.
After the audit
1.    Know your rights to appeal.
2.    Submit your appeal in writing as soon as possible and organize all documents for ease in reviewing.
3.    If there were ‘grey’ issues, provide convincing documents for rebuttal. Stick to the facts; however, proof of intent does carry some weight for determination.
4.    Be willing to fix problems or implement auditors’ suggestions, if practical and economical.
Audits are no fun. It can keep you up all night, but it doesn’t have to. Continuous training, good internal controls, and execution are the best solutions. Face it, incentives are not going away anytime soon and they are not getting any simpler either. It could just be a matter of time before the auditors show up at your door. Be ready!
Sherralyn Peterson is an automotive incentive specialist with 30 years of experience. For more information please call 312-310-8380, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit www.sherralynpeterson.com.