Auditor Responsibilities

1. Auditor Responsibilities 2014 CSP Contract Compliance Audit January 16, 2014 State Training Webinar AD14002

2. Rule 806.3.4 – Audit Core Team • D. Responsibilities • 2. The Audit Core Team will: • g) Obtain a response from the member states of their intentions to participate in the current audit cycle for each CSP.

3. Rule 806.3.5.5 (D)Tax Compliance Audit of Transactions Processed by the CSP D. Member state auditors are responsible for reviewing the seller’s transactions to determine if they were taxed correctly. If errors exist the auditors must determine if the errors were caused by any of the following reasons including but not limited to:

4. Rule 806.3.5.5 (D) • 1.) Deviation from the state’s rates and boundaries tables; • 2.) Noncompliance with the state’s taxability matrix; • 3.) Non-compliance with state approved expanded matrix; • 4.) Changes posted through Testing Central were not implemented in a timely manner (10 days); (This will be verified through the Audit Core Team); • 5.) Seller overrides of the CSP system; • 6.) Exemption information and/or certificates were not available or did not contain all of the required data elements; • 7.) Calculations that were tested and approved during the certification process; • 8.) Errors in computing tax were based on erroneous information from the states.

5. Current CSP’s • 11 – Taxware (ADP) • 13 – Avalara • 14 – Exactor • 15 – CCH (SpeedTax) • 16 – Accurate Tax • Currently no model 1 sellers • 17 – Fed Tax

6. Appendix F – 10/26/13 • SST Reports • Information and file layouts for required data elements for SST reports and files • Compensation Reports - 001ARC134V140116.csv • Audit Work Files - 001ARA134V140116.csv • Control Totals Files - 001ART134V140116.csv • Product Mapping Files - MS99999999134001V140116.csv

7. Audit Work Files • File Format: Files will be provided in a comma delimited (.csv) format. The CSPs will ensure there are no commas contained within the record fields. • Can be converted in Excel or other software such as ACL

8. Data File Layout • Data will show all sales records for your State only • Model 1 sellers shipping into your State • Will contain up to 41 fields (39 required) • File layout in Appendix F • Updated10-26-13 • See Example of file before and after

9. Audit Procedures Performed by the Core Team to Assist State Audits • Compile Data – Combine your State’s data • Reconcile Sales – All sales will be summarized by SER filing period by classification, SSTID • Verify Data – State responsibility to compare detail data summary to returns filed and control totals report from CSP (appendix F)

10. Audit Procedures Performed by the Core Team to Assist State Audits • Compensation – The core team will provide % breaks (dates) to all states • State to compare proper % was taken on the SER’s • Test Mapping Files • Core team will perform a sample from each CSP and compare to detail data • State Responsibility - Determined by each State

11. Product Mapping File • The CSP will provide a Product Mapping Report when insufficient information is passed from the Seller to the CSP. • Consider doing testing to verify that the CSP’s mapping file is correct!

12. Verify Exemptions • Your State will be provided an Excel workbook with all non-taxed sales • Sheet 1 – Taxability Matrix (Your State) • Sheet 2 – All Non Taxed Sales (tax = 0.00) • Sheet 3 – Product Exemptions • Sheet 4 – Quest Product Exemptions • Sheet 5 – Entity Exemptions • Sheet 6 – Quest Entity Exemptions • Sheet 7 – Taxable Sales – No Tax Charged

13. Certificate of Exemption Form • Can be found at SST Web Site Library: http://www.streamlinedsalestax.org/index.php?page=forms-2 • F0003 – Exemption Certificate • See Example • F0008 – Exemption Certificate Instructions

14. Exemption Certificate(s) • If data elements in Audit file are complete when audit of CSP is performed: • The exemption for that sale is accepted! • If missing data elements when audit of CSP is performed: • Follow your State guidelines for acceptance of an exemption • 120 days minimum must be given from date of notice (When you give them a list of questions)

15. Exemption Administration Training • Prepared by theStreamlined Sales Tax Governing BoardAudit Committee • PowerPoint presentation is available for States to use to train their auditors when reviewing exemption documentation.

16. Sales Tax Preliminary Compliance Audit (Feedback) Report • Preliminary Report Due June 16, 2014 • Main Page – Model 1 Sellers • Must be completed and returned to Core Team via Core Team Sharefile web site • Audit Report Page (2nd sheet) • Must be completed if questionable items are found from Model 1 sellers during audit of each CSP and request has been sent for additional documentation. • See Example

17. Sales Tax Final Compliance Audit (Feedback) Report • Final Report Due August 16, 2014 • Main Page – Model 1 Sellers • Must be completed and returned to Core Team via Core Team Sharefile web site • Audit Report Page (2nd sheet) • Must be completed if errors are found from Model 1 sellers during audit of each CSP • See Example

18. State Auditor Timeline

19. State Auditor Timeline . . .

20. Auditor Responsibilities • Thank You!