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A Tale of Two Audits

A Tale of Two Audits. Department of Revenue Audits Larry Clark, Clover Park Sabra Sand, Clark College. Audit Timeline for Clark College. 8-5-14 DoR contacted Clark informing us we were selected for a ‘random’ audit 8-6-14 In person meeting with DoR Auditor

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A Tale of Two Audits

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  1. A Tale of Two Audits Department of Revenue Audits Larry Clark, Clover Park Sabra Sand, Clark College

  2. Audit Timeline for Clark College • 8-5-14 DoR contacted Clark informing us we were selected for a ‘random’ audit • 8-6-14 In person meeting with DoR Auditor • 8-7-14 Auditor reviewed working papers for Sales and Use tax remits • 8-20-14 Auditor emailed sampling items list • 9-8-14 Auditor returned to review consumables items • 9-9-14 Auditor emailed questions or exceptions • 9-15-14 Auditor provided her final report

  3. Initial Audit Meeting • Scope – January 2011 thru June 2014, Retail Sales and Use Tax • We can only easily provide data for the last 25 months • Bookstore is on a separate system • List of all consumables • Showed her the list of sub-objects and she selected the following: • EA EE EH ES EY JA JB KA • Ran Datax reports to pull all items charged to the above sub-objects for the previous 25 months • We did not take out transfers, but I would consider it if we had to do it again • We deleted all vendor ID’s as some may be SSN and we did not feel comfortable emailing those • All equipment from our inventory database purchased within scope • We also provided a datax for the same time period pulling all transactions to the sales tax accrual account • Emailed all downloads in Excel format to the auditor • Sales and Use tax remit Working Papers for the most recent 24 months of audit scope

  4. Initial Audit Meeting, con’t • Sales and Use tax remit Working Papers for the most recent 24 months of audit scope • DoR Auditor wanted to review all revenue sources to determine taxability • We shared the usual areas, bookstore, culinary, auto • She wanted proof those were the only items • We shared the GA1335 so she could review the accounts • Items she questioned: • Lab Printing Charges • Library Book Replacement Account • Vending Revenue

  5. Auditor review of working papers • Requested daily detail from Bookstore POS system to match sales tax for 6 random months • Dates are off slightly since it is a separate system • Had to determine correct dates to pull before providing the reports • Only one minor concern for the bookstore • Use of zip codes rather than address for tax rates on internet orders

  6. Request for consumable backup • Auditor emailed with her sampling request using the transaction detail I had previously emailed • All capital assets purchased within the last 25 months (236 items) • Items with purchase dollar amounts of $150 to $2,199 (150 items) • Items with purchase dollar amounts of $2,200 to $19,999 (150 items) • High dollar consumables, or over $20,000 (79 items) • She wanted the paper backup pulled and numbered in her specific sequence • She did not want to use our imaging program, luckily we do both still (paper and image)

  7. Auditor Review of consumables • The auditor returned to the college and spent an entire day going through the 4 boxes of checks and their backup • She had compiled a list of items where sales tax wasn’t charged • She wanted proof we paid use tax • Directed her to the sales tax file we emailed her • She returned to her office and used that file to determine use tax

  8. Auditor Exceptions – preliminary • Auditor emailed her exceptions allowing us to respond as to why sales or use tax was not paid (6 items) • Invoice paid to SBCTC-IT for services • Contacted Cheryl Bivens and provided backup to auditor • Two invoices for online coursework access for students • Provided auditor with RCW 82.12.02084 - Exemption for digital goods for use by students • The remaining items were our error and simply missed so I acknowledged that

  9. Final Report • We had three exceptions listed in our final report • 2 in 2013 • 1 in 2014 • DoR policy is that there must be 3 or more in a year in order to project it across the population • Ours did not meet that requirement • Clark’s fine with interest was $936.00

  10. What we learned • Research all assertions the auditors have • DoR Website • RCWs • Be careful about digital goods • RCW only applies to student use • Reseller’s Permit • Provides exemption for items to be resold • Need to ensure those items don’t get used for other purposes • Our Auditor perferred paper, not images

  11. Final Report – Clover Park Technical College • Two auditors reviewed all purchases from FY13 over 5 partial days • 83 exceptions were noted in our single year sample, which was imputed to the other three years. The total of our exceptions was $25,208 or an error ratio of 0.643334% . • 34 -- automotive • 27 -- catering bills • 6 – were either credits or partial errors • 6 – dental supplies • 10 -- various • Clover Park’s imputed penalty plus interest was $7,120 for the 4 years

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