What it is
A dealership audit has three focal points: vehicle inventory and the floor plan that finances it, contracts in transit and the finance and insurance income that depends on lenders, and factory accounts such as incentives, holdbacks and warranty. Each has its own source documents and its own cutoff risk.
The program covers inventory observation and costing, floor plan confirmation and curtailments, sales and spot deliveries, F&I chargebacks, parts and service, cash, real estate and related parties. Steps carry an assertion, a sample-size note, a W/P reference and sign-off.
When to use it
- Planning the audit of a franchised or independent new or used vehicle dealer.
- When the dealer has floor plan financing, manufacturer incentive programs or related party real estate.
- To document how you test contracts in transit and floor plan reconciliation.
What’s inside
- Vehicle inventory, costing, floor plan and curtailment testing
- Vehicle sales, spot deliveries, contracts in transit and F&I income
- Factory receivables, holdbacks, incentives, parts and service
- Cash, real estate, related parties and ownership
- Tie-outs and general procedures
Standard cited
This template follows AU-C 330 / AU-C 501 / ASC 606. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained, AU-C 501 explained.
Questions
What is a contract in transit?
A vehicle sold and delivered with a retail installment contract that has been submitted to a lender but not yet funded. It sits in receivables at year end. Test the collectibility by funding after year end, and look for contracts that are never funded, which can mean a sale that was not final.
Why is floor plan a fraud risk?
A vehicle sold out of trust is sold while the floor plan lender is still owed for it and the proceeds are not remitted. Confirm the balance, reconcile the lender’s unit list to physical inventory, and test sold-vehicle payoffs after year end.
How should F&I income be tested?
F&I income from lender reserves and product commissions is variable consideration. Test the chargeback reserve against cancellations and early payoffs, agree commissions to lender and product provider remittances, and test the cutoff.
Related templates
- Audit Program: Inventory
- Inventory Observation Memo and Test Count Sheet (AU-C 501)
- Audit Program: Debt and Equity
- Confirmation Control Log (AU-C 505)
Last updated 11/05/2026. All free templates.