IFTA/IRP Audit Workshop Impact of Plan Rewrite on Auditors

1. IFTA/IRP Audit WorkshopImpact of Plan Rewrite on Auditors Presented By: Allen Cummings, California Jay Starling, Alabama January 2008

2. Implementation Date of Plan Rewrite July 1, 2008 Note:IRP Board has approved implementation of non-fee related provisions immediately.

3. Concepts for the Plan Rewrite • “If it’s not broke, don’t fix it.” • Organize Plan into topic areas – it will be easier to understand and administer • Determine which audit requirements belong in the Plan and which belong in the Audit Procedures Manual • Remove obsolete language • Remove unofficial commentary that is not binding • Remove all unneeded requirements for registrants and/or jurisdictions

4. Concepts for the Plan Rewrite • Prevent registrants from base-jurisdiction shopping to avoid paying delinquent fees, safety requirements or safety sanctions • Simplify language and clarify ambiguous definitions to facilitate uniform application of the Plan from jurisdiction to jurisdiction • Revise base-jurisdiction requirements to meet needs of both businesses and individuals • Allow for new technology • Accurate and timely collection of fees • Actual distances • Require reasonableness in the administration of the Plan

5. Plan Rewrite AUDIT RELATEDARTICLES • APM • Apportionable Vehicle • Reporting Period • Article IV – Fees • Article X – Operational Records and Audits • Article XII – Member Jurisdiction Duties and Cooperation • Audit Procedures Manual

6. APM - Definition New Definition “APM” means the Audit Procedures Manual required to be maintained in Section 1000.

7. Apportionable Vehicle - Definition Official Commentary The intent of the Registrant or Applicant to operate a Vehicle in two or more Member Jurisdictions is to be considered as an objective fact, determined from all the circumstances of the particular case. The fact that a Vehicle is not used in more than one Jurisdiction for the entirety of a Registration Year and for six additional months gives rise to a presumption that the Registrant did not intend to use the Vehicle in more than one Member Jurisdiction. Such a presumption may be overcome, however, by other circumstances presented by the Registrant.

8. Reporting Period - Definition “Reporting Period” means the period of twelve consecutive months immediately prior to July 1 of the calendar year immediately preceding the beginning of the Registration Year for which apportioned registration is sought. If the Registration Year begins on any date in July, August, or September, the Reporting Period shall be the previous such twelve-month period.

9. Reporting Period Chart

10. Reporting Period – Implementing New Definition Affects staggered registration jurisdictions not currently requiring Registrants who renew in October, November, and/or December to report actual distance for the most current July – June period. Also affects staggered registration jurisdictions currently requiring Registrants who renew in July, August, and/or September to report actual distance for the previous July – June period. During the transition period, affected registrants will use the same reporting period for two registration years. Jurisdictions may count each registration year audited as an audit, even though the reporting period is the same for both registration years.

11. Reporting Period – Implementing New Definition Example: Jurisdiction A is monthly staggered and has previously required the most immediate July – June distance for renewals effective August 1. They will notify their August and September 2008 renewal registrants that the reporting period of July 1, 2006, through June 30, 2007is required for this transition year only, which will be the same distance as was used for their renewal in 2007. Again, this is only for the transition year.

12. Reporting Period – Implementing New Definition Example: Jurisdiction B is monthly staggered and has previously required the previous July – June distance for renewals effective October 1. They will notify their October, November and December 2008 renewal registrants that the reporting period of July 1, 2006, through June 30, 2007 is required for this transition year only, which will be the same distance as was used for their renewal in 2007. Again, this is only for the transition year.

13. Transitioning to the New Reporting Period Definition

14. Transitioning to the New Reporting Period Definition

15. Section 405 – Calculation of Apportionment Percentage Apportionment percentages for actual and first year estimates are calculated prior to calculating second and subsequent-year estimated distance percentages. Actual distance is required for any vehicle registered during the reporting period unless: • The registrant has neither owned or leased apportioned vehicles for 18 months prior to the application date; or • The fleet was apportioned for no more than the last 90-days of the reporting period.

16. Section 420 – New Fleets A new fleet does not automatically qualify for estimated distance. Actual distance is required if: The new fleet is composed entirely or primarily of vehicles in which the applicant operated or exercised control over during the reporting period and the vehicles accrued actual distance in the jurisdictions for which the applicant seeks apportioned registration. This includes vehicles previously apportioned under long-term lease to a motor carrier (including the driver) if the operation will reflect the operation under the long term Lease.

17. Section 420 – New Fleets Example 1: John owns a vehicle, previously apportioned in his name. John purchases another vehicle and applies for registration under his business name, Trucks R Us, for both vehicles. Actual distance is required for all jurisdictions in which the vehicle registered in his own name accrued.

18. Section 420 – New Fleets Example 2: Sam owns a vehicle, leasing to Truck Express for several years hauling general freight in all 59 jurisdictions. He applies for IRP registration in his own name, still hauling general freight for Truck Express, but only in some of the IRP jurisdictions. Actual distance accrued by his vehicle while operating under Truck Express during the reporting period is required for the jurisdictions he requests.

19. Section 420 – New Fleets Example 3: Ted hauled general freight for the past year, leasing to Truck Express. He applies for IRP registration in his own name, now hauling potatoes in two jurisdictions. He is eligible to estimate.

20. Section 420 – New Fleets Example 4: Tom fully-plated his vehicle for the 2007, 2008 and 2009 registration years, operating interstate occasionally on trip permits. In 2010, he applies for apportioned registration. He is eligible to estimate as the definition of Total Distance specifies all distance operated by a fleet of apportioned vehicles.

21. Section 420 – New Fleets

22. Section 420 – New Fleets

23. Section 430 – Fleet Consolidation • A Registrant may combine two or more existing Fleets of its Apportioned Vehicles. • In such a situation, the Apportioned Fees of the Vehicles in the resulting Fleet shall be determined according to the actual distances accrued in the Reporting Period by all the Vehicles in the resulting Fleet.

24. Section 430 – Fleet Consolidation Example 1: John owns two vehicles, one apportioned in John’s personal name in Jurisdiction A, the other apportioned under John’s business name, ABC Trucking, in Jurisdiction B. John will not renew either fleet. Both vehicles are now being apportioned under John’s new business name, Trucks R Us, based in Jurisdiction B. Actual distance is required for all jurisdictions in which either or both vehicles accrued distance during the reporting period.

25. Section 430 – Fleet Consolidation Example 2: Lotsa Trucks Inc had three active Fleets in Jurisdiction X. At renewal, they move all vehicles to one fleet. Actual distance is required for all jurisdictions in which any of the vehicles accrued distance during the reporting period.

26. Section 430 – Fleet Consolidation Example 3: Bigg Trucking had two active Fleets, one based in Jurisdiction Y and the other in Jurisdiction Z. At renewal, all vehicles in the Jurisdiction Z fleet are moved to Jurisdiction Y. Actual distance is required for all jurisdictions in which either or both vehicles accrued distance during the reporting period.

27. Article X – Operational Records and Audits

28. Article X – Operational Records and Audits

29. Article X – Operational Records and Audits

30. Audit Procedures Manual • APM Sections changed to Articles • APM numbering changed to be consistent with the Plan • APM terminology changed to be consistent with the Plan (i.e. Member Jurisdiction) • Adequacy of Records provision moved from the Plan to the APM • Eliminated APM 403 - Computer Summaries, as language was redundant (401b and 402b) • On board recording device language moved from the Plan to the APM

31. Audit Procedures Manual • APM 704.2 was deleted as this language is provided in Article IV of the Plan • APM 704.4 was deleted as this language is provided in Article IV of the Plan • APM 704.5 was deleted as this language is provided in Article IV of the Plan • APM 704.6 was deleted as this language is provided in Article IV of the Plan • APM 803.4 was deleted as this language is provided in Article X of the Plan • APM Appendix A – Annual Report of IRP Audit Activity was renamed to Annual Report of Activity and moved to Section 1220 of the Plan

32. Plan Rewrite Questions?