Record keeping from an auditor; and industry perspective - GPS.

1. Record keeping from an auditor; and industry perspective - GPS. IFTA / IRP 2008 Annual AuditWorkshop Gene Hall (VA) Mark Byrne (NE) Drake Israel (IL) Tom Rushfeldt - Comdata

2. Introduction 1. REVIEW OF RECORD KEEPING REQUIREMENTS. ELECTRONIC RECORDS SAMPLE GPS QUESTIONNAIRE WHAT WOULD YOU DO ? PROPOSED IRP BALLOTS 2. 3. 4. 5.

3. Evaluating Vehicle Movement • The source documents must contain necessary details to trace vehicle movement. • IFTA and IRP require that the licensee/registrant have an acceptable distance recording system. This means that the carrier needs to account for all miles/kilometers traveled for each unit in these programs. • For IFTA, distance traveled shall be noted as taxable or non-taxable. • Both programs require similar documentation for each individual vehicle.Capturing this information either manually or electronically is acceptable.

4. IRP Proposed Ballot 2007.01APM Section 405 In recording the actual distance traveled on an Apportionable Vehicle, the Registrant must record all movement (interjurisdictional and intrajurisdictional) including loaded, empty, deadhead and/or bobtail distance. The Fleet distance and routing information must be obtained from the original source documents. Fleet distance and routes created before the event occurred are not acceptable and is evidence of non-compliance unless the registrant can substantiate the information with original source documents from either the driver or the on-board recording device.It shall further be the responsibility of the registrant to record all distance traveled by apportionable vehicles while operating with trip permits.

5. APM Section 401 / IFTA P540 • Acceptable Source Documents for Distance (IVDR) (aka IVMR) i. Date of trip ii. Trip origin and destination iii. Route of travel (may be waived*) iv. Beginning and ending odometer (maybe waived*) v. Total trip distance traveled vi. Distance traveled by jurisdiction vii. Unit number

6. The Base Jurisdiction may waive either item iii (route of travel) or iv (beginning/ending odometer readings), but may not waive both items (iii) and (iv).Prior to or subsequent to Audit, a Registrant may petition, in writing, their Base Jurisdiction for a waiver of either route of travel or beginning and ending odometer readings. The granting of the waiver of either, not both, of these requirements must be done in writing and with reasonable cause. The written waiver must be signed by the Base Jurisdiction and is good only for as long as that Fleet’s accounting system is in effect. IRP Proposed Ballot 2007.08 APM Section 401

7. IRP Proposed Ballot 2007.09 APM Section 401 • (iii) Route of travel; the standard identification of route of travel is the name or number of the highway or road used.(may be waived by Base Jurisdiction);

8. What is acceptable? • How much information can be missing before you lose accuracy?

9. IFTA requires that the licensee maintain complete records of all fuel purchased, received, and used in the operations of its business. Retail and bulk purchases must be accounted for separately by fuel type.Supporting documentation for fuel purchases is typically a receipt but may include vendor generated transaction listings or microfilm documents. IFTA P550 Acceptable Source Documents for Fuel

10. IFTA P560Record keeping for retail fuel • Regardless of the information used to support retail purchases, it is required to contain the following information: i. Date of purchase ii. Seller’s name and address iii. Number of gallons/liters iv. Fuel type v. Price per gallon/liter vi. Unit number vii. Purchaser’s name

11. IFTA P570 Bulk Fuel Requirements In order to receive credit from bulk fuel withdrawals, the licensee needs to record: • the date of the withdrawal • the number of gallons/liters • the fuel type and • the unit number of the vehicle which received the fuel. It is also required that a bulk fuel inventory reconciliation be maintained and records kept to substantiate that tax was paid on the bulk fuel purchased.

12. Bulk Fuel Reconciliation Example Thom R’s Beer Hauling Express Bulk Fuel Reconciliation for Aug 2007 Beg Inventory 8/1/07 12,000 + Purchases 6,500 Total Gallons Available for Use 18,500 - Gallons Withdrawn 7,050 Calculated ending inventory 11,450 Actual End Inventory 8/31/07 11,300 Unsupported bulk withdrawals (150)

13. . The IFTA P540 requires monthly vehicle summaries.

14. IRP (APM 402) requires: • A monthly summary that recaps distance by Jurisdiction and Total Distance for each Power Unit operated during the calendar month; • A quarterly summary that recaps distance by Jurisdiction and Total Distance traveled by the Fleet during each calendar quarter; and • A summary of the quarterly recaps used in preparing the application for apportionment. Summaries are not acceptable at face value and must be supported by source documents such as IVDRs in order to be of any use during an Audit.

15. IFTA vs. IRPThe Plan eff. 7/1/081065 (d) NETTING OF AUDIT ADJUSTMENTS When an Audit finds a net overpayment by the Registrant, the Base Jurisdiction shall refund the amount of the overpayment to the Registrant; except that, if the Registrant failed to make necessary records available for examination or if the records made available were inadequate to conduct an Audit of the Registrant, the fees netted pursuant to the Audit shall not include credits for the Registrant which arise by virtue of the unavailability or inadequacy of its records.

16. The carrier has the option of using onboard recording devices. These devices are not required by either IRP or IFTA. If the carrier chooses to use one of these devices, the recording system would have to meet the record keeping requirements of both IFTA and IRP.

17. There are two ways to look at electronic audits: 1. The computer and related software you use to conduct an audit. 2. The registrant’s / licensee’s computer and related software.

18. Some systems that have been encountered: 1) Manual trip reports – Excel (spreadsheet) used to compile – probably the most common. 2) Manual trip reports - Access (data base) used to compile. 3) On board recording devices 4) Global positioning systems (GPS) 5) Fuel info from supplier in Excel or some data format via e-mail or download 6) Bulk fuel information that is derived from a computer based key system. What have you seen?

19. When you run into an electronic system there are several things you need to know about it. a) What does the driver do? b) Are there any reviews or checks by office staff? c) How does the information get into the system? At what point? Reviews or checks before entry? d) Does their system do any automated checks? e) If odometers are entered, does the system check odometer total distance to jurisdiction total distance?

20. Would you accept records if kept electronically by registrant/licensee? The main thing to remember is what information do you need to test distance and fuel? You should ask as many questions about the software and procedures in order to fully understand them.

21. Have you conducted a GPS audit?What questions do you ask about the carriers system?

25. What would you accept? • In your next audit, the carrier only provides you with quarterly odometer readings and distance by jurisdiction. • Can you accurately determine total travel or travel by jurisdiction?

26. Think about this-- • How are you able to determine total distance if you can’t verify where the carrier went? How are you able to determine true jurisdictional distance? • How can the carrier complete an IFTA tax return or IRP renewal without that information?

27. Remember this- • If the carrier can’t tell you how they came up with their distance other than estimating them, how can your audit be any more accurate? • Are you more relaxed with the program requirements than the carrier is?

28. The carrier gives you- • Odometer readings and no routes of travel. The odometer readings are by unit and by date. Also included are the ending destinations. All the O.T.R. fuel receipts are provided. • No waivers have been granted for this carrier.

29. Questions: • Is the carrier in compliance with the IFTA? • Is the carrier in compliance with the IRP? • Can you audit this? • Would you grant credit in an audit with records like this?

30. How about this? • Your auditing a carrier that uses computer software to pre-route its trips. During the audit, you notice major differences between the “reported” (based on the pre-routed computer software trips) and the fuel receipts when you noticed the fuel stops didn’t seem to line up with the routes of travel. You also find receipts to jurisdictions without distance information.

31. Questions: • Can you audit this? • Was the carrier in compliance? • What adjustments would you make if any? • Would you grant IFTA credit back to the carrier for other jurisdictions or deny them? • Would you grant IRP credit?

32. Thanks!