You can be audited because the IRS has questions about your tax return--or just because the IRS's computer selected you at random. Depending on the type of audit, you'll be notified by either a letter or a phone call.
As of 2010, the IRS was conducting three kinds of audits. From least serious to most serious, they were the correspondence audit, the office audit and the field audit.
The IRS conducts a correspondence audit entirely by mail, usually because it just has a couple questions about your return. For an office audit, you'll have to bring all your paperwork to an IRS office for a meeting with the auditor. In a field audit, the auditor comes to you to look over your records--and possibly poke around your home or office looking for red flags.
If you're picked for a correspondence audit or office audit, you'll get a letter notifying you and telling you what to do next. If you've been picked for a field audit, you'll get a phone call.