Standards vs. Procedures

2. Standards vs. Procedures • Auditing standards differ from auditing procedures. Procedures are acts that the auditor performs during the course of an audit in order to comply with the standards.

3. G A A S Generally Accepted Auditing Standards

4. OVERVIEW • Issued by the American Institute of Certified Public Accountants – AICPA • Defined in the Statements on Auditing Standards - SAS

5. General Standards • Field Work Standards • Reporting Standards

6. SAS 95 & 98 • General Standards • Adequate proficiency and training as an auditor • The audit is to be performed by a person having adequate technical training and proficiency as an auditor. • Independence • An independent mental attitude is to be maintained by the auditor

7. Due Professional Care • Due professional care is exercised in the performance of the audit and preparation of the report.

8. Standards of Field Work • Planning and Supervision • The work should be planned and any assisting auditors should be supervised. • Understanding the basic characteristics of the client

9. Internal controls • Internal controls should be evaluated as a basis for relying on the records for testing/sampling.

10. Sufficient evidential matter • Records, observations, inquiries and if necessary 3rd party records should be used in determining reliable audit results.

11. Standards of Reporting • Basically apply to financial auditing, not tax/fee compliance

13. How do the standards relate to IFTA and IRP auditing? • Both the Agreement and the Plan address these standards in their respective Audit Procedures Manuals.

14. General Standards • Adequate training and proficiency

15. IFTA Audit Procedures Manual • A200 General Standards • .100 Training and Proficiency • Auditors should have adequate technical training and proficiency as outlined in Section A400. • Section A400 – Personnel Qualifications and Responsibilities • A410 Administration • A420 Audit Staff

16. IRP Audit Procedures Manual (proposed) • Article 2 - General Accounting and Auditing Standards • 201. Training and Proficiency • The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor.

17. Independence • An independent mental attitude is to be maintained by the auditor.

19. IFTA – Audit Procedures Manual • A200.200 Auditor Independence • Auditors should maintain independent mental attitudes in relating to audit assignments. The auditor must be without bias with respect to the licensee under audit to ensure impartiality. This independence is an obligation to fairness.

20. IRP – Audit Procedures Manual (proposed) • Article 2, 205. Auditor Independence • Free from personal and external impairments to independence • Independent mental attitude • Without bias with respect to Registrant • Maintain impartiality

21. Due Professional Care

22. IFTA Audit Procedures Manual • A200 – General Standards • .300 Professional Care • Professional care should be exercised during the audit field work and in preparing the Interjurisdictional Audit Report

23. IRP Audit Procedures Manual (proposed) • Article 2 – General Accounting and Auditing Standards • 202.Professional Care • Conducted in a professional manner • Results clearly documented • Uniform program

24. Standards of Field Work

26. Planning and Supervision

27. IFTA Audit Procedures Manual • A220 Examination Standards • .100 Preaudit analysis • Preaudit analysis shall be conducted and documented. • Reported information • Trends • A410.200 • ….There must be supervisory follow-up and review of the auditor’s procedures

28. IRP Audit Procedures Manual (proposed) Article 2, 204 – Adequate Planning and Supervision • Field work adequately planned and supervised • Standardized audit program (checklist) • Report and work papers reviewed and approved by Audit Supervisor

29. Internal Controls Trip Sheets Summaries Returns/Registration

30. IFTA Audit Procedures Manual • A220.200 Examination Standards • Study and Evaluation • Internal accounting should be evaluated in order to determine if the licensee’s records can be depended on in order to perform a sample. • A640 Evaluation of Internal control • .100 Review and documentation • Information-gathering phase • Inquiry • observation

31. Changes in the accounting system • Records retained • Supporting documentation • Identify weaknesses in the system

32. IRP Audit Procedures Manual (proposed) • 203. Study and Evaluation • Registrant’s reporting system • Study • Evaluate • Sampling test work and projections • Reliability of internal accounting controls • Impact of any weaknesses in the controls

33. Article 7 • 702. Evaluation of Internal control • Review and documentation • Tests of compliance • Report on weaknesses

35. Sufficient Evidential Matter

36. SAS 103 • Requires audit documentation in sufficient detail to: • Provide an experienced auditor with no previous connection to the audit a clear understanding of the work performed. • Nature • Timing • Extent • Results of audit procedures performed

37. The audit evidence obtained, its source and the conclusions reached. • Requires the auditor to document audit evidence that is identified as being contradictory or inconsistent with the final conclusions • How the auditor addressed the contradiction or inconsistency

38. IFTA Audit Procedures Manual • A520 Standard Approach • Evaluate licensee’s distance accounting • Verify fleet miles/kilometers to source documents • Determine if distance accounting properly accumulates all operation distances • Verify jurisdiction allocations

39. A670 Audit Documentation • Communicate audit results • Document & justify procedures • Indicate source of audit results • Communicate suggestions & recommendations • Clearly support audit findings

40. A680 Audit File Contents • .100 Schedules • Summary schedule • Supplementary schedules • .200 Support Documentation • Detail information • Actual records reviewed which support audit results

41. Detail of retail or bulk purchases • Detail of bulk fuel withdrawals • Analysis of trips audited • Listing of Records Maintained • Indicate what records are maintained • If in compliance with the Agreement & the Plan

43. IRP Audit Procedures Manual (proposed) • Article 2, 206. Working Paper Documentation • Working papers should be sufficiently detailed so that a reviewer (internal or external) can understand them without extensive oral explanations….

44. Working papers should: • Provide the principal support for the Audit report • Aid in the performance of and review of audits • Facilitate third party reviews • Document whether audit objectives were achieved • Document all planning, audit procedures performed and conclusions reached

45. 401.Adequacy of records • Consistently product required information to substantiate application • Sufficient detail that vehicle movement may be traced • Operational records that support • Total In-Jurisdiction Distance • Total Distance • 406. Accountable Distance Traveled • Registrant must record all movement • Interjurisdictional • Intrajurisdictional • Empty • Deadhead • Bobtail

47. Standards of Reporting

48. IFTA Audit Procedures Manual • A660 Audit Reports • .100 Licensee Audit Report • Name and Address of licensee • Account Number • Audit Period • Types of records audited • Description of audit techniques • Net distance adjustments • Net tax paid fuel purchases adjustments

49. MPG/KPL as reported • Net fuel tax adjustment per jurisdiction • Remarks and recommendations • Signature of auditor or reviewing official and date • Interjurisdictional Audit Report • Name of base jurisdiction • Name and address of licensee • FEI or equivalent • Reported tax by jurisdiction • Audited tax by jurisdiction

50. Penalty • Interest by jurisdiction • Total by jurisdiction