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Fundamentals of IRP / IFTA Audits

Audit Reports,Closing Conference

& Audit File

Presented by:

Diana Kay (FL) Stacey Hammock (WY)

Audit Reports

• IRP – The Plan 1055; Audit Procedures Manual (APM) 601

• IFTA – Agreement (R)1370; Audit Manual A460

• IFTA/IRP Combined Audit Reports

Who/What/When

• Who receives the audit report

• What must the audit report contain

• When do we provide the audit report

• Reexaminations and Appeals

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Registrant/General Information

• Name of base jurisdiction

• Auditor’s name

• Date report issued (IRP)

• Carrier Contact Information:

– Name

– Address

– Phone (IFTA says, where required)

– Representative

– Account Number

Registrant/General Information (Cont’d)

• Fleet number (IFTA says, where applicable)

• USDOT number (where required)

• Audit period (IFTA)

• Registration year(s) audited (IRP)

• Reporting period audited (IRP)

Registrant/General Information (Cont’d)

• Number of vehicles apportioned (IRP)

• Summary of business operations

• Any trends and variances (IRP adds unusual)

3

Evaluation of Internal Controls

• Reliability

• Strengths and weaknesses

• Changes

Opening Conference

• Provide the date and persons attending (IRP)

• Provide opening and closing conference dates and attendees or reason why, if not held (IFTA)

Sampling Methodology

• Describe sampling methodology OR

• Reason sampling was not performed

• Note the periods and vehicles sampled

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Distance/Fuel Examination

• Identify the source documents

• Identify the information in those documents

• Describe the procedures used to verify– reported distance

– reported fuel

– MPG/KPL

Distance/Fuel Examination

• What methodology was used to allocate any unreported distance (IRP)

• Explain the distance and fuel adjustments

• Are there any discrepancies between– summaries and IFTA returns

– summaries and IRP renewal application

• Were any vehicles removed from the fleet and assessed full plate fees (IRP)

• Are the records adequate or inadequate?

Closing Conference and Recommendations

• When & who attended

• If not held, why (IFTA)

• Recommend changes necessary to comply

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Summary

Describe:

• the audit procedures

• findings

• additional information deemed necessary

Billing Summary - IRP

• Reported distance traveled

• Reported percentage• Reported fees

• Audited distance traveled

• Audited percentage

• Audited fees

• Percent change

• Net fees due• Net fees owed by or due to the registrant

The following information is required, by jurisdiction

Billing Summary - IFTA

• Total net distance adjustment

• Net distance adjustment by jurisdiction

• Net tax paid fuel purchases adjustment

• Reported MPG/KPL

• Audited MPG/KPL

• Net fuel tax adjustment per jurisdiction

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Billing Summary – IFTA (Cont’d)

• Reported tax by jurisdiction• Audited tax by jurisdiction

• Penalty

• Interest by jurisdiction• Total by jurisdiction

Friendly Reminders

• Use proper grammar & spell check

• Write in a clear and concise manner that is easy to understand

• Ensure the taxpayer’s personal info is accurate and correctly spelled

Closing / Exit Conference

IRP – APM 404

• If not held, reasons must be documented in the audit file

IFTA – A460.300

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• There should be no surprises or controversy at this stage of the audit

• Inform the carrier of problem areas as the audit progresses

Closing / Exit Conference

Schedule as far in advance as possible

Have a presentation outlinea) cover important itemsb) highlight strong and weak

areas

Ensure the carrier understandsa) how the audit was performed;b) how the sample results were

applied

Closing / Exit Conference

Listen to the carrier's questions and comments

Be open to additional information

Provide the applicable statutes / regulationsa) Fair treatmentb) Determines the requirements

Closing / Exit Conference

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Review the report OR advise what to expect

Rights of appeal

Are the results subject to change?

Closing / Exit Conference

Do…

Be prepared, confident, patient and courteous Be professional, while friendly and helpful Communicate effectively and accurately Encourage feedback Be open to new information Discuss recommendations Provide samples

(IVDR’s, summaries, etc.)

Do’s & Don’ts

Don’t…

Be confrontational

Be in a hurry

Talk down to the taxpayer

Do’s & Don’ts

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Audit File

• Evidence of planning and supervision – APM 203(b); A230• Deviations from the jurisdiction’s audit program – APM 205

• Audit communications (written & oral) APM 401(b); A440

• Waivers or postponements – APM 401(c)• All records requests – APM 403(b)

Audit File (Cont’d)

• Non-compliance findings in previous audits – APM 501(b)

• Vehicles in the registration year and reporting period – APM 501(c)

• Vehicles operated and characteristics that may impact –A310.100

• How is fuel obtained, type of fuel, bulk storage locations –A310.200

Audit File (Cont’d)

• Allocation of any unreported distance – A340

• Clear proof for the reduction of reported fuel – A360

• Example records – APM 502(b); A320

IFTA A470– Supplementary schedules

– Support documentation

• Detail information• List of records maintained

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ResourcesIRP Plan & APMhttps://www.irponline.org/page/theplan

IRP Audit Reference & Best Practices Guidehttps://www.irponline.org/page/auditguide

IFTA Agreement, Procedures & Audithttps://www.iftach.org/manualnew.php

IFTA Best Practices Audit Guidehttps://www.iftach.org/committee/ac/AC%20BEST%20PRAC

TICES%20GUIDE%20-%20EDITED%20-%20DP.PDF

IRP Audit Committeehttps://www.irponline.org/page/AuditCommittee

IFTA Audit Committeehttps://www.iftach.org/committee/ac/

Fundamentals of IRP / IFTA Audits

Pre-Audit Planning & Opening Conference

Evaluation of Internal Controls

Sampling

To Project or not to Project

Audit Report / Closing Conference / Audit File

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Watching with a group? Add completion of the

“Verification of Attendance”

form to your list of

things to do.

http://www.irponline.org/?AttendanceForm