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Audit Assignment ReviewColorado Department of Revenue
ACCT 4540/5540
Table of Contents
1 Audit Assignment Review
Prepared For: Prepared For: Tammy Sorensen, Senior Auditor: [email protected] Jim Marlatt, Professor: [email protected]
Prepared By:Prepared By:Bishop Bhandari: [email protected]; 720-270-1066Brandon Dyer: b [email protected] ; 303-489-9101Daniel Deshe: [email protected]; 614-595-5865Torrence White: [email protected]; 303-478-5661
Storyboard................................................................................................................................. 3Premise................................................................................................................................................. 3Core Conflict........................................................................................................................................ 3Tension................................................................................................................................................. 3Turning Point...................................................................................................................................... 3Resolution............................................................................................................................................ 4
Project Charter......................................................................................................................... 5
Roles and Responsibilities................................................................................................... 7
Deliverables............................................................................................................................ 10Analysis of the Current Audit Assignment Process.............................................................10Analysis of Other States’ and CPA Firms’ Audit Assignment Processes........................13Recommendations for a New Audit Assignment Process..................................................15Analysis and Recommendations on How to Improve Motivational Techniques and Offer New Incentives......................................................................................................................18
Milestones............................................................................................................................... 21
Work Breakdown Structure.............................................................................................. 23
Risk Management Plan........................................................................................................ 24
Stakeholder Analysis........................................................................................................... 27
Cost Benefit Analysis........................................................................................................... 29
Status Reports........................................................................................................................ 32
Risk Management................................................................................................................. 32
Quality Assurance................................................................................................................. 33
Change Management............................................................................................................ 33
Lessons Learned.................................................................................................................... 34
Appendix.................................................................................................................................. 35Meeting Minutes.............................................................................................................................. 35Research............................................................................................................................................. 37
States Responses...........................................................................................................................................37Colorado Department of Revenue Survey to Auditors.................................................................51Research from CPA Firms and Managers...........................................................................................60Research from Protiviti Website............................................................................................................62
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Storyboard
Premise
Improve audit efficiency by assigning audits based on each auditors personal skill
set and maintain motivation of the agents while increasing audit accuracy and
decreasing the time to complete audits.
Core Conflict
The current audit assignment process is inefficient because the best, most suited
agents for different types of audits are not always assigned to those audits.
However, a change to this process may cause employees to be less motivated and
create strong resistance.
Tension
Doing nothing to change the current audit assignment process will continue to make
it difficult for the department of revenue to collect the correct amount of money
owed to them in a timely and low cost manner. Also, new employees will not be
motivated to perform at their highest level because of the seniority based audit
assignment system.
Turning Point
Maintain the current audit assignment process or change to a standardized process
based on personal skill set while maintaining employee motivation.
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Resolution
Standardizing the audit assignment process and providing intrinsic benefits will
help the State of Colorado Department of Revenue Field Audit Division collect the
correct amount of revenue and keep motivation high for employees.
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Project CharterFormat taken from CUAccelerate.comProject Purpose: The purpose of this project is to increase audit quality and efficiency by creating a more efficient audit assignment process based on performance while raising motivation and creating more incentives for better performance on audits without increasing the current costs of the audits. Prioritized Measurable Objectives:
Create a standardized audit assignment process throughout the State of Colorado Department of Revenue.
Eliminate the current seniority based audit assignment process and replace it with a process based on skill sets.
Suggest various motivational techniques and intrinsic incentives to help managers keep the agents motivated.
Project Manager Authority:In order for this project to be successful, the project manager will need the authority to:
Determine the project approach, including milestones; deliverables; and schedule.
Determine project resource requirements, including funding, people and equipment.
Determine how to allocate/reallocate project resources throughout the project.
Fire project team members. Identify and communicate directly with all project stakeholders as the
project manager sees fit. Determine which recommendations to implement if the project
sponsor/project stakeholders do not provide this feedback within three business days of it being requested.
The project manager does not have the authority to do the following without first getting the project sponsor’s approval:
Cancel the project. Increase project funding beyond what is approved in the project plan. Extend the overall project timeframe beyond six months.
Project In-Scope: Develop audit assignment process. Collect research from other state’s Department of Revenue and CPA firms. Increase audit quality and efficiency by assigning each agent an audit that
best fits an agent’s skill set or development plan. Keep motivation and morale high while implementing the new processes. Provide intrinsic benefits to employees.
Project Out-of-Scope: Promote the new audit assignment process within the State of Colorado
Department of Revenue. Create a new training process.
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Improve audit selection process. Increase costs of audits. Recruit new auditors. Provide monetary benefits to employees. Improve the performance evaluation process.
Project Assumptions: A culture of seniority exists within the department that is kept in place by the
agents with seniority whom have no incentive to change assignment process. The biggest incentive for the senior agents is their ability to have first choice
of audit they work on. Managers are unable to base performance on the money an audit brings in to
the department. Managers prefer to allow agents to create a list of audits they would like to be
assigned to because it makes the assignment process easier for them. Incentives for new auditors are low compared to working with a non-
government accounting firm. Expectations of an audit are not clearly defined to an agent. Many new agents are not receiving the proper training. New agents are having trouble learning from the senior agents. Some agents are selecting their audits based on destination rather than skill
sets. No standardized process for assigning audits currently exists.
Deliverables: Analysis of the current audit assignment process. Analysis of other states’ and CPA firms’ audit assignment processes. Recommendations for a new audit assignment process Analysis and recommendations on how to improve motivational techniques
and offer new incentives.
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Roles and Responsibilities
Each week team members are assigned tasks that they are responsible to complete
by the following meeting. Tasks have been assigned on a volunteer basis and are
assigned equally throughout the team.
Role: Responsibilities:
Project Sponsor- State of Colorado Department of Revenue and Tammy Sorensen.
Approve project charter. Provide resources necessary to
complete project. Communicate any department
changes that may impact the project.
Help project team resolve any problems that are encountered during the project.
Project Manager- Bishop BhandariMyers Briggs Personality Analysis: Personality: ENTJ
ENTJs have a natural tendency to marshal and direct. This may be expressed with the charm and finesse of a world leader or with the insensitivity of a cult leader. The ENTJ requires little encouragement to make a plan. ENTJs are decisive. They see what needs to be done, and frequently assign roles to their fellows. When challenged, the ENTJ may by reflex become argumentative. ENTJs are capable of living on a higher plane, if you will, and learning to value individuals even above their principles. The above dynamic suggests less individuation. ENTJs have extraverted sensing but introverted feeling.
Some of the famous ENTJs:Franklin D. RooseveltSteve JobsJim Carrey
Develop project plan and get approval from project sponsor.
Communicate group questions with Jim Marlatt, project sponsor, and project mentors.
Communicate information received from sponsor, Jim Marlatt, and mentors with the project team in a timely manner.
Assist team in determining roles and responsibilities.
Provide research on performance processes.
Ensure team is on track to meet project deadlines.
Assist in creating survey to send out to the state of Colorado auditors.
Assist in creating and sending survey to other states’ Department of Revenue.
Project Manager- Daniel Deshe Develop project plan and get
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Myers Briggs Personality Analysis: Personality: ESTJ
Supervisors are highly social and community-minded, with many rising to positions of responsibility in their school, church, industry, or civic groups. Supervisors enjoy and are good at making schedules, agendas, inventories, and so on, and they much prefer tried and true ways of doing things over speculation and experimentation. Supervisors keep their feet firmly on the ground and would like those under their supervision to do the same, whether employee, subordinate, spouse, or offspring. Supervisors have no problem evaluating others and tend to judge how a person is doing in terms of his or her compliance with, and respect for, schedules and procedures.
Some Famous ESTJ’s include:Judge JudyGeorge WashingtonSandra Day O’ ConnorVince Lombardi
approval from project sponsor. Assist team in determining roles
and responsibilities. Take meeting minutes and
communicate them with the team in a timely manner.
Provide research from various state departments of revenue and state auditors.
Ensure team is on track to meet project deadlines.
Assist in creating survey to send out to State of Colorado auditors.
Assist in creating and sending survey to other states’ Department of Revenue.
Team Member- Brandon DyerMyers Briggs Personality Analysis: Personality: ENJF
ENFJs enjoy organizing group activities and tend to take their commitments seriously. In general, they are reliable and do not like to disappoint others. As team players and project leaders, they have a gift for rallying their players, focusing on what is being done right and each member's strengths. They carry conversations well, finding common ground with their speaker. They tend to find the correct and gracious way to respond in any given situation, no matter how tense or uncomfortable it is.
Develop project plan. Assist team in determining roles
and responsibilities. Provide web-based research
(including Protiviti website) for project.
Assist in developing new audit assignment process.
Assist in creating survey to send out to state of Colorado auditors.
Assist in creating and sending survey to other states’ Department of Revenue.
Team Member- Torrence White Develop project plan
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Myers Briggs Personality Analysis: Personality: ISFJ
ISFJ’s are Protectors whose primary interest is in the safety and security of those they care about. For their part, Protectors value tradition, both in the culture and in their family. Protectors prefer to make do with time-honored and time-tested products and procedures rather than change to the new. They are not as outgoing and talkative as the Provider Guardians [ESFJs], and their shyness is often misjudged as stiffness, even coldness, when in truth Protectors are warm-hearted and sympathetic, giving happily of themselves to those in need. Their reserve ought really to be seen as an expression of their sincerity and seriousness of purpose. The most diligent of all the types, Protectors are willing to work long, hard hours quietly doing all the thankless jobs that others manage to avoid. Protectors are quite happy working alone; in fact, in positions of authority they may try to do everything themselves rather than direct others to get the job done. They also know better than any other type the value of a dollar, and they abhor the squandering or misuse of money.
Some Famous ISFJ’s include:Mother TeresaJimmy StewartTsar Nicholas II
Provide research from CPA firms about their audit assignment process.
Assist in developing new audit assignment process.
Assist in creating survey to send out to state of Colorado auditors.
Assist in creating and sending survey to other states’ Department of Revenue.
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Deliverables
Analysis of the Current Audit Assignment Process.
The current audit assignment process at the State of Colorado Department of
Revenue is based on seniority. While no standardized process is currently in place,
the most common process allows the auditors to request audits and are assigned
them based on the auditors seniority level and if the auditor is suited for the audit.
The problem with the current system is that auditors are selecting their
audits based on location first and foremost and then based on type of audit and how
qualified they are for it. Of the 11 responses to the surveys sent to the auditors at
the Colorado Department of Revenue, 9 auditors have said they choose their audit
based on the location. This is causing the most experienced and qualified auditors to
get the audits that are in the best location and not the audits they are most qualified
for. As a result of this, the lower level auditors are being stuck with audits that they
are not qualified for and may not have all of the skills to complete as efficiently as
possible.
Based on the responses to the surveys, higher level auditors and thus agents
with more seniority like the current process because they get their first choice of
audits and get to go the locations of their choice. However, lower level auditors have
said that they either do not think it is fair or just go along with it because that is the
way it is done.
For in state audits it makes sense to allow the auditor to choose their audits
based on location because it reduces the travel time for an auditor and reduces the
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amount of money spent by the Department of Revenue in travel costs. Also it makes
sense for an auditor in Denver to perform and audit in the Denver area and not in
places far away such as Telluride or Pitkin County. The problem with the in state
assignment process is that auditors are still not being assigned to the audits they are
most qualified for which may be in the same city they are performing the audit they
have chosen. To solve this problem a new process must be created for in state
audits.
For out of state audits the current process of seniority does not work.
Because the auditors are choosing based on location, higher-level auditors are
potentially getting audits that they are over qualified for and lower level auditors
are potentially getting audits they do not have the skills to complete. An example of
this is when an auditor with more seniority chooses the audit in Miami, the easier
audit that is perfect for a lower level auditor, over Wichita, the more difficult audit
that the higher level auditor has the skill set to complete, because he or she wants to
get out of the cold and be in warm Miami by the beach. This creates the obvious
problem of the lower level auditor getting the more difficult audit that he or she may
not be able to complete as efficiently as the higher level auditor would have been
able to.
While it would be ideal for the auditors to keep the current process and
choose their audits based on their skill sets and the requirements of the audits, it is
not possible to ensure this happens without a change in the process. The audit
assignment process needs to change in order to enable to Colorado Department of
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Revenue to perform at top efficiency and generate all of the revenue owed to the
state.
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Analysis of Other States’ and CPA Firms’ Audit Assignment Processes.
There were eleven departments of revenue that responded to our survey
about their audit assignment process and motivational techniques. We also acquired
information from industry sources on the same topics.
The majority of the states that responded said that they do not use a
seniority-based system for the audit assignment process. These states had either the
managers or separate assignment committees decide what audits each agent should
go on. The criteria for their decisions are based on the factors of agent skill,
experience, and quality of past performance. Industry sources from two auditors
confirmed that they followed the same process.
Findings from our research also show that seven of the states and both
industry auditors do not give their agents any say at all for which audits they want
to go on. However, there are four states that do give their agents a chance to voice
their preference. Wisconsin is one example of a state that allows for some input
from the agents. Under their system an agent may make a request using any
decision factors that they wish. Their request is then sent to their audit assignment
unit for discussion. The assignment unit allows the agent their choice only if they
feel that the agent has enough experience to perform it. South Dakota is another one
of the states that allows their agents some say in the audit assignment process. Their
system utilizes a pool of audits that can be chosen from. Some of their auditors are
considered experts and can make their choice without review. The other agents can
still request a specific audit but a supervisor must authorize it. Washington also
stated that they have an assignment process that allows for agent requests. Their
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process lets agents ask for an audit in a specific industry but not for a specific
taxpayer. The final decision is made by a manger that decides based on the agent’s
skills to complete the audit. Washington said that this system allowed for their
auditors to gradually develop in different areas. All of the departments of revenue
responded that their employees were satisfied with their current audit assignment
process. The industry auditors echoed this in their responses.
Considering other states’ and CPA firms’ audit assignment processes will
help create a new and efficient audit assignment process for the Colorado
Department of Revenue Field Audit Department.
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Recommendations for a New Audit Assignment Process
In order to have an effective new process in the State of Colorado
Department of Revenue field audit division, it is important to use feedback from the
auditors and keep some components of the old process. Also, the process must be
standardized throughout the entire division. The new process will draw from what
is working at other states while still allowing the auditors some choice in what
audits they are assigned.
For in state audits, it is still important to use location along with personal
skill sets when assigning the audits. In order to prevent high in state travel costs,
auditors should be assigned to audits in the areas surrounding them and not across
the state. However, this will only work if the auditor has the proper skills to
complete what is needed out of the audit. To ensure this, higher level auditors such
as revenue agents II, revenue agents III, and senior agents who have more
experience and a larger skill set will be assigned to the larger in state audits and the
smaller audits will be assigned to the lower ranked agents. To ensure the auditors
still have some choice in the audits they are assigned, part of the state of
Washington’s process will be incorporated. They allow auditors to request specific
industries but not specific taxpayers. This allows the auditors to have a chance to
gain experience and develop their skills with all types of businesses. By
implementing this, auditors will still have a choice when selecting audits but the
choice will no longer be based on location rather it will be based on developing and
using auditors’ skills. Auditors will only be assigned to the industry of their choice if
a reasonable audit is available for the requesting auditor. It is also important that
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auditors are assigned to different industries and types of audits help them gain
experience and keep them motivated.
Out of state audit assignment will no longer be based on seniority but rather
be based on performance and experience. Since the average amount of revenue
generated is higher in out of state audits than in state audits, it is important to
assign the most appropriate auditor to each audit. Because auditors were previously
selecting based on location when the seniority process was in place, the best auditor
for each audit may not have been assigned. To ensure the process is at full efficiency,
each out of state audit will be assigned by the managers based on previous
performances on audits and what the types of audits each auditor is best at. To keep
some choice in the process, the auditors will once again be allowed to request an
industry or type of audit but not be allowed to request a specific taxpayer. However,
this request will only be met if there is a suitable audit that the manager is sure the
auditor will be able to complete as efficiently as possible. Auditors will also be able
to request different auditors that they feel they work best with and be able to
request to not work with the auditors they do not work well with. Managers should
take this into account when assigning the audits because by pairing auditors that
work best with each other will help make the audits more efficient and be able to be
finished quicker thus allowing the division to perform more audits and generate
more revenue owed to the state.
While change in the current process is typically met with resistance, it is
important to target the auditors that like the new process and get them to be
advocates for the new process. Also, using the new motivational techniques will help
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make this change go smoother. It is important to remind the auditors that this
process is being changed not to punish them but to help make their audits go
smoother and generate the correct revenue owed to the State of Colorado while also
rewarding auditors for their performance and not just sticking everyone in a line
based on their seniority with the division.
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Analysis and Recommendations on How to Improve Motivational Techniques and Offer New Incentives.
The current auditor assignment process provides a certain level of
motivation for employees as it promotes acquiring seniority within the Department.
However, as our proposal is to change the audit assignment process to reduce the
emphasis on seniority, there is a corresponding risk that auditor motivation will be
reduced. To counter this potential risk, our group is suggesting that the Colorado
Department of Revenue institute a culture of intrinsic motivation so as to foster
positive attitude alongside the transition of processes.
In anonymous surveys our group conducted within the audit department at
the Department of Revenue, we found that the overwhelming majority of agents
stated in some degree that they were self-motivated to do well at their job. A
majority of agents also stated that they chose audits to perform based on the
location of the audits. Our proposal to change the assignment process relies on an
auditor’s skill set in determining which audits he or she will perform, which will
perhaps motivate agents to develop a wide range of skills in order to have the
option of greater audits. However, there is potential to reduce the motivation of
these agents as this change removes a major benefit of the job.
Our group has conducted research amongst companies in Denver to analyze
best practices in motivating employees. From this, we have identified two
companies that we believe mirror the goals of the Colorado Department of Revenue.
At Xcel Energy, a large corporation experiencing restrictions on discretionary
spending similar to the Colorado Department of Revenue, as it is a regulated utility,
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managers provide their employees with certificates of accomplishment when goals
are met or when the manager recognizes an employee going above his or her
responsibilities. Providing such certificates to revenue agents at the Colorado
Department of Revenue would likely help in the transition of processes as managers
can recognize agents who are working to develop their skill sets or to train lower-
level employees. CBIZ Tax and Advisory, LLC, a local CPA firm whose small size and
staff demographic resembles that of the Colorado Department of Revenue, provides
recognition to employees in monthly meetings in the presence of the Business Unit
President. The Department can use any meetings with employees and managers in
a similar fashion to recognize employees, thereby providing validation to those
employees who are progressing. With this idea of recognizing employees publicly,
both Xcel Energy and CBIZ managers send e-mails to individual employees
congratulating them on their efforts and copy a senior manager or supervisor on
that e-mail. With this practice, we believe that the agents of the Colorado
Department of Revenue are likely to maintain their motivation throughout the
transition of our proposal.
Our group collected information on motivational techniques being used in
nationwide departments of revenue and in industry. In our responses from the
states, only Wisconsin explicitly stated that they utilize intrinsic motivational
techniques by recognizing work that is well done through customer service and
innovation awards. They also allow inclusion on special projects for top performers
and use meetings with upper management and letters of commendation to
recognize employees. Most of the other states responded that they do not use
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intrinsic motivational techniques or that they only use promotion and schedule
flexibility.
On a final note about the motivation of Colorado Department of Revenue
employees, we believe that because this group of agents is largely self-motivated
and because our proposal requires the development of agent skills, employees will
be motivated by the challenge of growing their skill sets. It is not to say that a
particular audit in a desirable location will not be offered to an agent who wishes to
be in that location, as long as that agent has the necessary skills for that agent.
However, developing that agent’s skill set increases the pool of audits available to
him or her. This is in itself a motivator for the Colorado Department of Revenue
agents.
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Milestones
September 9:
• Determine project purpose.
• Determined some roles for each team member.
• Came up with project premise, core conflict, and tension.
September 16:
• Developed project plan and approach.
• Started initial research.
• Updated premise and conflict.
September 23:
• Second round of research due.
• Split up deliverable sections.
September 30:
• Initial individual deliverable work due.
October 4:
• Developed most of the first deliverable.
October 7:
• First draft of deliverable due.
October 14:
• First deliverable due in class.
October 21:
• Update risk management
November 11:
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• Create PowerPoint presentation
November 18:
• Give first PowerPoint presentation and get feedback
December 2:
• Finish 4 deliverable parts, cost benefit analysis, and risk management
sections.
December 6:
• Finish final deliverable paper
December 7:
• Finalize presentation
December 9:
• Turn in final deliverable
• Give final presentation.
Work Breakdown Structure
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Risk Management Plan
Risks associated with our proposal that would inhibit the Colorado Department of
Revenue in achieving their value-based objectives include:
Matching skill sets with the complexity of the job
The practice of allowing senior members to first choose audits could
bring risk of uneven audit assignment. It is highly possible that the auditors
could choose some of the jobs that they may not be qualified for, and conversely,
some auditors could choose easy audits that do not challenge them at all. The
Colorado Department of Revenue is risking efficiency by not using the right skills
in the right place. A novice auditor assigned to a highly complex job could result
in more errors and more audit hours. Moreover, there is a greater chance that
inexperience will transfer to the job when a less knowledgeable agent has to deal
with a more complex taxpayer and cannot answer questions.
High employee turnover and no job attraction for quality auditors:
Lack of sufficient training and growth opportunity with the current
seniority based audit assignment system is resulting in high employee turnover,
at least among new agents at Colorado Department of Revenue. The seniority
system may not allow new agents to give any input in the existing system.
Senior agents habituated of the current audit assignment process do not want to
change. This leaves some new agents frustrated as they may be sent to very
complex audits at the very beginning of their career. In addition, Colorado
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Department of Revenue may be currently unable to provide incentives that
would encourage new graduates to work for them instead of the public
accounting firms. Colorado Department of Revenue does not have a defined set
of career paths that would entice college graduates to work for them.
Untrained auditors at work:
Colorado Department of Revenue lacks training programs and incentives
for their agents that would help them gain an understanding of specific taxpayer
businesses and their industries. Internal accountants and auditors for the
taxpayers are mostly on top of all current issues and regulations as they are
required to have certain hours of Continuing Professional Education credits as
part of their CPA certification requirements. When revenue agents go for an
audit they could lack the same skills as the internal auditors and CPAs of those
industries. This can significantly affect the revenue agent’s decision making and
it may lead to poor audit quality.
Uniformity in the audit process and recommendation to the taxpayers:
A tradition of doing things that the senior staff feels comfortable with creates
a difference in audit quality and recommendations to taxpayers for compliance.
A standardization of the process would benefit all parties – Colorado
Department of Revenue, auditors and taxpayers. Lack of a standardized process
may keep new employees from doing their work efficiently as they may not be
able to figure out inconsistent audit procedures currently used. With the lack of
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uniformity, Colorado Department of Revenue may have to spend more time in
going over last year audit report. They would have to decide what procedure to
use if two previous auditors have done the same audit in two different ways.
This could lead to inefficiency. Also, on the other side, when taxpayers are
recommended two different things for compliance each year, they may not be
encouraged to follow the procedure that Colorado Department of Revenue
recommends.
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Stakeholder Analysis
Name Role Interest Influence
Expectations Ways to Manage Expectations
Auditors Users High High Complete what is required of their job.
To get promoted. Collect the correct amount of
revenue owed to the State of Colorado.
The State of Colorado Department of Revenue provides a salary.
Provide performance evaluations.
Managers Users High High Want their agents to be efficient without having to compromise with their own comfort zone.
Make sure that the managers and the agents are involved throughout the process so that the transition would be smooth.
Department of Revenue
Users High High An efficient audit assignment process.
Increase agents’ efficiency and accuracy.
Collect the correct amount of tax revenue.
Have a new audit assignment process that matches the complexity of audits with the auditors’ skill sets.
Jim Marlatt Facilitator High High Make sure the project objectives are accomplished on time.
Communicate with Jim weekly and make sure that the group is meeting its milestones.
Group Members
Consultants High Med Provide recommendations based on research to increase Colorado Department of Revenue’s overall efficiency.
Group members’ class grades are based on the project.
Increase self-esteem if process is implemented.
Companies Audited
Tax Payers Med Low Abide by the tax laws. Have quality auditors audit
them.
Have the correct auditors with proper skill sets audit their company.
Audits will take less time to
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complete as a result of better qualified auditors being assigned.
Knowledgeable auditors will be available for questions as opposed to auditors less suited for different types of audits.
Future Employees
Users Med Low Good learning environment. Will enter into a workplace with a clear system for audit assignment.
More effective use of skills and experience.
New employees enter into a motivating work environment.
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Cost Benefit Analysis
Below are possible cost-benefit scenarios to be considered by the Colorado
Department in relation to our proposal:
Implementing new audit assignment process:
Cost:
There is potential that the new process may reduce the motivation of senior-
level auditors because a major benefit of seniority within the department is
priority in choosing audits. They are fine with the current audit assignment
process as they have a first say on audit assignment.
There is a transition period associated with changing from the seniority-
based system to the skill-based system, which will require the Department to
devote time to communicate with employees and assist agents in developing
skills.
The new standardized process will initially consume some time as agents
devote portions of their day to developing their skills.
Benefits:
The new audit assignment process will increase the overall efficiency for the
audit department. Matching skill sets of agents with the complexity of audits
would help Colorado Department of Revenue agents complete more audits
within same time frame. The new audit assignment process would benefit
Colorado Department of Revenue by reducing audit hours per audits and
increasing the number of audits that can be done throughout the year.
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Our standardized process helps in promoting better audit quality by
matching agent skills with the complexity of audits. Agents would be more
effective at doing their job and that would help them collect the correct
amount due to the Colorado Department of Revenue.
As the standardized system would eliminate existing seniority and
preference based audit assignments, it would put all agents and manager on
equal ground, bringing the feeling of inclusiveness among junior agents.
Providing intrinsic benefits to the agents:
Costs:
The Colorado Department of Revenue may incur some monetary costs to
motivate employees. Some of those costs may be to provide light snacks
during meetings or to decorate an agent’s office to recognize his or her
accomplishments.
It changes the culture of Colorado Department of Revenue so people might
not feel comfortable with the new culture, at least in the beginning.
Benefits:
Providing intrinsic benefits motivates agents to do a better job. Awards and
other recognition based on various core competencies would motivate
agents to develop their skills in conjunction with the new standardized
process.
Our proposals of intrinsic motivation bring self-esteem. It is obvious to feel
encouraged and respected when praised by others. Recognizing good work
30
would provide more incentive for agents to develop their skills and cross-
train.
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Status Reports
As part of the project communication plan, team members met once a week
to discuss various aspects of the project. Weekly meetings enabled group members
to get feedback from peers on their work and helped the group to evaluate the
overall progress of the project. Project members met with Professor Jim Marlatt
once a week to get ideas on moving forward with the project. On top of all these
meetings, the group met with Tammy Sorensen at the middle of the semester to
update her on the project and to get some feedbacks on moving forward with the
project.
Risk Management
The new audit assignment process and some of the intrinsic motivational
techniques suggested in the deliverables consider the risks identified earlier.
Implementation of the new process would help the Colorado department of revenue
in achieving their value-based objective. However, some of the risks associated with
the implementation of the new audit assignment process and setting a culture of
motivating agents through intrinsic motivational techniques are as follows:
Agents may perceive the new audit assignment process as something that
would make their job harder at first sight, but involving agents throughout
the implementation phase would mitigate this risk.
It may be challenging to match agents’ skill sets with the complexity of audits.
It would require a thorough analysis of agents’ performance review and
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complexity of audits to make sure that agents’ skill sets are matched with the
type of audits.
Making sure that the culture of motivating agents through intrinsic benefits
is implemented properly so that agents perceive this culture positively and
perform at their best to get these benefits.
Quality Assurance
In order to make sure that the project is able to deliver the final product,
various analyses were done throughout the semester. Some of those analyses were
risk analysis, cost benefit analysis and stakeholder analysis. In addition, to make
sure that the final recommendations work for the Colorado Department of Colorado,
we sent survey questionnaires to the agents at the Colorado Department of Revenue
and other states’ Department of Revenues. We also talked to managers from a
regulated utility company and CPA firms to get an insight of their operation and to
consider how that can fit into the Colorado Department of Revenue.
Change Management
During the time between the first and second deliverable, changes have been
made to the project. The most significant changes have been made in the deliverable
section. Due to wanting to narrow down the focus and lack of information the
analysis of current performance review process and the recommendations on how
to improve the performance review and how to integrate the new process
deliverables have been replaced with an analysis of other states’ and CPA firms’
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audit assignment process. By replacing the performance review parts with more
information on other states assignment process, the deliverable will be more
focused and have more information and research to go along with the focus.
To reflect the change in the deliverables section, the objectives, scopes, and
work breakdown structure had to be updated as well. This changed had no affect on
costs and help improve the quality of the deliverable because focus became more
concentrated and allowed the group members to spend more time on a narrower
focus rather than more spread out time on a wider focus.
Lessons Learned
As a team, we learned that it is important to plan the entire project out at the
beginning of the project and to set deadlines and goals throughout the project dates.
This was important to do because with such a large project it is vital to make sure it
is getting completed along the way and not left to be finished close to the deadline.
Also, it is vital to make sure the group members understand what is expected of
them and to make sure everything is communicated in a clear way so as to avoid any
confusion about the project.
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Appendix
Meeting Minutes
Meeting Minutes 9-9-09
1. Developed a premise- increase efficiency by utilizing best personal skills of auditors without compromising their motivation.
2. Developed a core conflict- motivation vs managing skill set- determining what is each persons best skill
3. Developed a tension- between manager and auditors based on their choice of audit
4. Determined some roles and responsibilities Daniel- minutes Torrence- Bishop- team lead, email questions Brandon
5. For next week: each person is to come with an example
Meeting minutes 9-16-09
1. Daniel, Bishop, and Torrence came with an example. Brandon was waiting to hear back from the person he contacted.
2. Updated premise to include: improving the audit quality and speed.3. Updated the core conflict to include: if we take away seniority then the
motivation may go down and so will the audit quality.4. Assigned more research:
Daniel- Call States Bishop- call industry companies Brandon- check protiviti Torrence- CPA firms
Meeting minutes 9-23
1. Everyone came with research examples.2. Decided on date to meet up and work on slides- oct 43. Split up deliverable sections:
a. Assumptions- Brandonb. Objectives- Daniel c. Stakeholder analysis- Torrenced. Risk Management- Bishop
4. Goal is for everyone to come with points to talk about for their deliverable next meeting
5. Everyone is to send out his research this week.
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6. Plan on having deliverable done one week before due date.
Meeting minutes 9-30
1. Everyone came with work mostly completed on their sections.2. Worked on assumptions and stakeholder analysis.3. Completed WBS.4. Assignments for next week:
a. Come with deliverable completed.b. Everyone complete Myers Briggs and put research into paragraphs.c. Work for Daniel- Project Charter, Scope, Deliverables, plan for more
researchd. Work for Bishop- cost benefit analysis, finish risk management plan.e. Work for Torrence- finish stakeholder analysis.f. Work for Brandon-finish premise, core conflict, tension, turning point
and resolution.
Meeting minutes 10-7
1. Finished deliverable2. Everyone came with their parts and we created the rest of the deliverable not
completed already. 3. To do: email letter to all the states
a. Daniel- email first 15 state of alphabetb. Bishop- email second 15 statesc. Torrence: email third 10 statesd. Brandon- email last 10 states.
Meeting minutes 10-14
1. Presented deliverable.2. Got feedback from Tammy.3. Created survey to send to auditors in DOR.4. Emailed survey to Tammy to send out.
Meeting minutes 10-21
1. Used Stratera’s help to update risk management2. To do: study for test
Meeting minutes 11-11
1. Created PowerPoint presentation for next weeks presentations2. Split slides up for presentation3. To do:
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a. Brandon: make slides look good
Meeting minutes 11-18
1. Gave presentation in class2. Met quickly to split up final deliverable sections to work on over break:
a. Daniel- analysis of current process, recommendation for new process.b. Torrence: analysis of other states and CPA firms’ process.c. Brandon: Motivational techniquesd. Bishop: cost benefit analysis and risk management plan.
Meeting minutes 12-2
1. Torrence, Daniel and Bishop met with sections mostly completed.2. Started to put final deliverable together.3. For Sunday 12-6:
a. Daniel- update milestonesb. Bishop- c. Torrence- update stakeholder analysisd. Brandon- Work on slides
Research
States ResponsesInterview 1.William Collier- chief auditor for Columbus under state auditor- 1800-443-9275 ask for Bill.
1. What level auditors do you have? - Staff auditor, Audit manager, and senior auditor.
2. How is each audit assigned? - Geographical break up of region, each team consists of 7 people: 1 senior, a few managers and staff auditors.
3. Are audits in state, out of state, or both? - In state4. Is assignment based on performance or seniority? - They have a book of
business each 6 months and each team is assigned based on their performance in the past. Seniority is not granted. They have a control in place to make sure people get appropriate audits.
5. Are the auditors happy with the system? - Yes, the qualified people get what they are most qualified for.
6. Is the current process efficient? - Yes7. Is it ok for someone from my team to contact you again? - Yes
Interview 2- Shaun Sookram- manager Nebraska Department of Revenue- 402-471-5751
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1. Do you assign the audits to your auditors? - Yes I am a part of the group that does it.
2. What level auditors do you have? - Senior auditors and Auditors3. How are audits assigned? - They are based on the type of audit and
qualifications of auditors.4. Do the auditors have a choice in the which audits they perform? - No5. Are the auditors happy with this system? - Yes6. Are audits individual or businesses? - Both7. Are audits in state or out of state? - Both8. What is the typical travel time for an auditor? - We tell them up to 6 weeks,
typically 2 weeks out of state and 4 weeks in state.9. How is performance rated? - Based on our performance review process
which uses feedback from companies and auditors and each audit is graded based on a set of guidelines.
10. Are the auditors motivated with your way of assignment? - Yes they seem to be motivated; there has been no input from the auditors that it should be changed.
11. Is it ok for a member of my team to contact you again? – Yes
Below is the email sent out to all 50 states Departments of Revenue and the responses we received.
Please forward to the field auditing department at the State department of Revenue
Dear Department of revenue auditor or manager,
My name is Daniel Deshe and I am a student at the University of Colorado, Boulder. I am currently in an accounting information systems class and am doing a project on auditor assignment in the state department of revenue. I have a few questions about how audits are assigned to agents and it would be greatly appreciated if you could take a few minutes of your time to answer some questions that I have.
1. What types of audits does the DOR do? (Such as in state, out of state, corporation, individual, large companies, small companies or a mix of these)
2. What level auditors do you have and typically how many of each? (Managers, senior auditors, staff auditors)
3. Can you please explain the audit assignment process (is it performance based or seniority based, do the auditors have a say in which audit they get, does it differ for in state and out of state audits)?
4. Are the auditors and managers happy with the current assignment process in place?
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5. Do the auditors specialize in specific areas and types of businesses or do they work all over?
6. What is the typical in state and out of state travel time per year per agent?
7. Can you please explain your performance review system?
8. Do you feel the performance review system is effective and is it being followed?
9. What types of incentives do you give agents to perform at their highest level?
10. What benefits do you offer when recruiting new agents such as a set pay scale or promotion and other benefits to stay competitive with public accounting firms?
11. What type of training do you offer (on the job, in a class room, additional training every year)?
12. Would it be all right if a team member or I contact you in the future?
Florida’s response
1. All types
2. Tax Auditor 1-4 and Computer Audit Analyst
3. We have a centralized selection some thought is given to size complexity and employee experience
4. Usually
5. Some specialize but most work all types of cases
6. Not calculated
7. Files receive multiple reviews and are scored at each level
8. Yes
9. No specific incentives particularly in current budget constraints
10. Better hours, Leave and retirement
11. All
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12. Probably not a problem Maryland’s response
1. We audit both in state and out of state and all size companies
2. We have managers, supervisors, senior auditors and lower level auditors.
3. Audits are generally requested by the supervisors.
4. They seem to be.
5. We have different tax types and the auditors are hired for the tax type, sales and use corp tax etc...
6. For corporation tax it is approx. 10 to 12 weeks a year. For sales and use about 2 to 3 weeks per year.
7. Already explained to Maxwell Sarlo.
8. Yes
9. None
10. We offer promotion to the senior level.
11. On the job.
12. I think we have contributed enough. Hope this has helped.
Oregon’s response
1. I recently answered some similar questions to these for another student at Colorado in AIS. I'll do my best to answer your questions briefly in e-mail, if you have additional questions, you can contact me at 503-947-2129.
2. All of the above. We have a Personal Income Tax division and a corporate audit division. Both involve auditing full year, part-year, and nonresidents.
3. We have Tax Auditor Entry (the first year), Tax Auditor 1 (automatically promoted to after first year) and Tax Auditor 2 (Senior Tax Auditor). Our Audit staff either works in the main building at the state capital (approximately 20 auditors personal income tax auditors and a similar amount for corporate auditors) or in a field office in a city in the state.
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(Probably 40 auditors are distributed throughout the field working on Personal Income tax)
4. We recently changed our assignment process. For audits, auditors are assigned an audit based on a "pull" done by a senior auditor. The senior auditor programs his criteria for which returns he wants the system to pull, and then the auditor is assigned returns to audit out of this pull. Auditors do not presently have a say in which audits they are assigned.
5. It's still relatively new doing it this way, but so far it seems to be yielding decent results.
6. In the past we have done more specialization. The division was divided up into teams and members of the teams would do audits related to the team they were on. This is still true to some extent, but we are focusing on quick and high dollar audits right due to the economic downturn so we are all auditing the same issues assigned from the pull.
7. This really varies depending on what the agent is doing. Auditors that work in the main building have very little travel time. Field Auditors might have more, but I really can't even begin to guess how much.
8. Initially, 100% of an auditor's work is reviewed. After the auditor shows competency, the review level is reduced to 20% and eventually down to 5%. This type of review is done by senior auditors to ensure the auditors adjustments are correct and properly explained. When an auditor makes an error on their audit, the reviewer gives them an error and the number of audits submitted for reviewer with errors on them is tracked. This number is known as an auditor's "error rate." We typically strive for no errors, but an error rate of 5% is considered acceptable for experienced auditors. We also keep track of the dollars generated from audits and have periodic meetings with our manager to discuss the metrics and other aspects of our performance.
9. Yes
10. First, we do an exceptional job of hiring driven employees. We are also offered several benefits such as flexible schedules and telecommuting opportunities, job shares (for employees who want to go from full time to part time). All of these types of benefits can be granted at the discretion of management. Practically, employees that are doing well get them. Those that are not, do not.
11. The first big advantage we offer new agents is that our health care is fully paid for by DOR. When I moved from my previous job to DOR, the gross pay amount was only about 33% higher. However, the fact I no longer had to pay
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for health insurance resulted in my check being over 50% larger than it had been with my previous employer. We also are able to offer a less demanding work life than those in the private sector experience. Specifically, we work only 40 hrs a week and overtime is generally not allowed. As I'm sure you are aware, a 60+ hour work week is not uncommon in the private sector for accounting jobs. I've often made the case that by the time our retirement benefits (also funded by DOR), health insurance, and 40 hour work week is factored in, we probably do better on a per hour basis than those in the private sector.
12. New Auditor's are hired in group hiring. They spend the first 6 weeks of their employment going through classroom training. They are then assigned mentors and begin doing single issue correspondence audits (i.e. They only look at one item on the tax return and don't meet with the taxpayer face to face). The classroom training has three tests. Each subject is taught by an auditor who has experience with the subject being taught. We also have yearly tax law updates and auditor workshops to improve our audit skills.
13. yes, if you have additional questions, please feel free to call me at 503-947-2129. No e-mail, please.
Jared HouserTax Auditor503-947-2129
South Dakota’s response
1. We will audit any business that is licensed to operate in our state. We will travel anywhere in the continental US to conduct the audits.
2. We have entry level auditors and Senior Auditors. It takes 4 years of ojt before you can be considered for Sr Auditor status. We have 4 supervisors over the 45 staff.
3. Audits that are selected for audit are put into a pool that auditors can select from. Newer staff must have their selections approved by their supervisor. We have some staff that are considered state wide experts and they are usually granted first choice on businesses that fall within their expertise. The balance of the staff can select from the pool or from audits that they identify as being of value.
4. Some staff would like to have 100% of their audits assigned, we usually expect the staff to select about 75% of their core audits from the pool and the other 25% from research they perform or from leads they find.
5. Some staff are considered state wide experts on certain fields. Telecom, ag
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and ag processing, mining and oil exploration, cash audits and large scale contractors are some areas that we have identified as areas of expertise.
6. When we go on a fly trip, the staff is required to schedule enough audits in the area to keep them busy for a 2 week period. We stay over the weekend. When driving out of state they are allowed to schedule for 1 week at a time.
7. We currently have a generalized process that is conducted on a yearly basis with input from the supervisor and an area for the staff to answer 5 input questions selected by the supervisor.
8. We are in the process of updating the review system to be more specific to the actual tasks performed and better defining the expectations for each task.
9. We stress professionalism, allow some flexibility to scheduling for the top performers.
10. We are not able to stay competitive with public jobs. We have focused on hiring staff with little or nor post college experience and train them.
11. We have 2 weeks of class room training where the staff learn the laws, & regs and how they apply, 1 week of procedures training and then the balance of the first 6 months is OJT.
12. Yes. Texas’s response
1. THE COMPTROLLER OF PUBLIC ACCOUNTS AUDITS TAXES ADMINISTERS A LARGE VARIETY OF TAXES AND WE AUDIT CORPORATIONS, PARTNERSHIPS, AND SOLEPROPRIETORS IN STATE AND OUT OF STATE.
2. OUR AUDITOR LEVELS ARE
AUDITOR I 61 AUDITOR II 33 AUDITOR III 50 AUDITOR IV 177 AUDITOR V 150 AUDITOR VI 65
AN AUDITOR I IS A NEW HIRE.
3. AUDITORS ARE MATCHED TO AN AUDITOR WITH THE EXPERIENCE LEVEL
TO COMPLETE THEM. MANAGEMENT ASSIGNS ADUITS. WHEN POSSIBLE, AUDITORS ARE GIVENASSIGNMENTS CLOSE TO THEIR RESIDENCE.
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4. THE PROCESS WORKS WELL.
5. MOST AUDITORS DO LIMITED SALES AND USE TAX AUDITS. THERE ARE
APPROXIMATELY 25 AUDITORS THAT ARE DEDICATED TO FRANCHISE TAX, A DOZENTHAT DO IFTA TAX, AND PROBABLY AN EQUAL NUMBER THAT DO MOTOR FUELS ANDMIXED BEVERAGE. EIGHT AUDITORS DO INSURANCE TAX AUDITS.
6. THE AVERAGE AUDITOR SPENDS 25 TO 35 PERCENT OF THEIR TIME
TRAVELING.
7. THE DIVISION HAS CORE AND AUDIT COMPETENCIES WITH ESTABLISHED STANDARDSFOR EACH AUDITOR LEVEL. THESE ARE USED TO GRADE THE INDIVIDUAL AUDITOR'S PERFORMANCE. PERFORMANCE APPRAISELS ARE PROVIDED ANNUALLY INADDITION TO A SEMI-ANNUAL INTERIM APPRAISAL. AUDITOR Is ARE EVALUATEDMORE FREQUENTLY TO MONITOR THEIR PROGRESS.
TO ASSURE UNIFORMITY AND JUSTIFICATION OF THE RATINGS GIVEN, THEASSISTANT MANAGER OF AUDIT DIVISION READS ALL OF THEAPPRAISALS.
8. YES
9. EMPLOYEE REWARDS ARE BASED ON EXCEPTIONAL PERFORMANCE BASED ON TRAININGSCORES AND EVALUATIONS. BEING RECLASSED FROM ONE AUDITOR LEVEL TOANOTHER REQUIRES A MINIMUM AMOUNT OF TIME AT THE PREVIOUS LEVEL. MERITSARE SALARY INCREASES BASED ON EXPEPTIONAL PERFORANCE BETWEENRECLASSIFICATION OPPORTUNITIES.
Auditor I - 6 months 12 months Auditor II 6 months 9 months 15 months
Auditor III 9 months 12 months 18 months
Auditor IV Merit Merit 12 months 15 months 24 months* Auditor V Merit Merit 12 months 18 months 36 months* Auditor VI
IN ORDER TO BE ELIGILBE FOR THE PROMOTION TO AN AUDITOR V OR VI,
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ANAUDITOR MUST REACH A BENCHMARK SALARY.
AUDITORS MAY ALSO BE AWARDED ADDITIONAL LEAVE TIME BASED ON EXCEPTIONALPERFORMANCE IN LIEU OF MONEY.
THE COMPTROLLER PROMOTES AN eDAY FOR EMPLOYEES. THE OFFICE MANAGEMENTSPROMOTES SOCIAL COMMITTEES THAT PROMOTES ACTIVITIES AMONG THE AUDITSTAFF.
10. THE COMPTROLLER'S OFFICE PROVIDES A DEFINED BEGINNING SALARY AND MEDICALAND RETIREMENT BENEFITS.
11. THE TECHNICAL TRAINING IS PROVIDED UNDER THE AEGIS OF THE AUDIT DIVISIONTRAINING GROUP. A NEW HIRE UNDERGOES 15 WEEKS OF BASIC AUDIT TRAINING(BAT) BEFORE PERFOMING AND ON THE JOB TRAINING BEFORE PERFORMING HIS/HEROWN AUDITS. THE 15 WEEKS CONTAIN TWO WEEKS IN THE OFFICE AND ONE WEEKCOMPRISED OF CLASSROOM TRAINING WITH LIMITED FIELD EXPERIENCE. BAT CONTAINS THREEGRADED CASE STUDIES AND ONE COMPREHENSIVE PRACTICALS.THREE MONTHS AFTER BAT COMPLETION, THE AUDITORS ATTENDS A WEEK OFINTERMEDIATE I, THREE MONTHS LATER IT'S INTERMEDIATE II, AND THREEMONTHS LATER ADVANCED AUDIT. FOLLOWING THESE MANDATORY CLASSES THEAUDITOR CONTINUES TO BE TRAINED IN A VARIETY OF AREAS. A LISTING OFCLASSES WITH A BRIEF DESCRIPTION IS ATTACHED.
12. YES. YOU HAVE MY EMAIL AND PHONE NUMBER. Washington’s response
1. The Washington State Department of Revenue only audits business, since we do not have an income tax in Washington. We have 289 employees in the Audit division. In our core auditing function we have 17 in state managers who supervise 188 auditors and 5 out of state managers who supervise 42 auditors and 10 contract auditors. Our headquarters functions include a tax discovery/research unit (9), audit program support unit (6); Computer Assisted Audit Program unit (6) and a review/quality control unit (11).
We audit sole proprietors to fortune 100 companies.
2. Managers: 32
Senior Auditor: 83 (37 of these are based out of state)
Staff Auditors: 148
Our typical in-state audit staff has one manager, 2 senior auditors and 9 staff auditors
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Our typical out-of-state audit staff has one manager, 7 senior auditors and 1 staff auditor and 2 contractors
3. Accounts are either assigned from headquarters or selected by the manager. Audits are then assigned by the manager, based on the ability of the auditor. The auditor could ask for an audit in a specific industry but not a specific taxpayer. This process ensures that all auditors get a chance to develop and gain experience with all types of business.
4. Yes
5. Our auditors are generalist but some do specialize in specific industries due to the complex nature of the accounts.
6. An in state auditor typically has minimal travel with the exception of those based in the eastern part of Washington
An out of state auditor has a significant amount of travel. These auditors are based in cities across the US and can cover a large area.
7. Goals are set at the beginning of the year and the auditor is kept up to date on there progress on a monthly basis. Each auditor is reviewed every year as to the number and quality of audits completed with weight being given to those auditors who undertake very large and complex audits. Most of our employees are also conducting other non-audit tasks, such as speaking engagements and other educational efforts. All employees are also evaluated on their conduct and general performance as a state employee.
8. Auditors are aware of their performance expectations and thus know what they have to achieve. Management has placed a high priority on completing 100% of all employees’ evaluations each year.
9. We do not have an incentive program.
10. We hire most of our auditors as a Revenue Auditor 1. After two years they can promote to a Revenue Auditor 2 based on passing an exam and their performance.
11. When an auditor is hired they are given 3 weeks of tax law and computer training, followed by on the job training and other formal classroom training throughout their career. After that they have a training plan that explains what training is required and within what timeframe. The training plan was created so that auditors would know what training is necessary for them to advance in the auditor series.
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West Virginia’s response
1. All types; desk audits, in-state, out-of-state, corporation, individual, large companies, small companies or a mix of these.
2. 2 tax and revenue managers, 6 tax unit supervisors II, 7 tax and revenue auditor 1, 9 tax and revenue auditor 2, and 31 tax and revenue auditor 3.
3. Senior auditors are assigned the larger more complex audits. The auditors have NO say in which audit they get. Out of state auditors are assign on the basis of who is next to go out of state and are they capable (experienced enough to conduct the audit). In-state audits are assigned to a tax unit supervisor 2 by geographical area and the supervisors assigns the audits based on the experience of the auditor and complexity of the audit (large or small company).
4. Yes5. General they work all types of audits and all over. We have tax unit
supervisors with 6 to 10 auditors which cover a certain geographical area of the state plus conduct out-of-state audits. We do have an excise unit with auditors stationed through out the state and they conduct only excise tax audits (bingo, raffle, cigarette, soft drink, motor fuel, IFTA, and IRP tax audits).
6. Each auditor generally travels about 10 hours a week for in-state audits and for out-of-state 2 weeks a year. Travel time is 240 hours per year. In-state travel time is per auditor 224 hours and 16 hours out-of-state. Note that we only capture actual travel time to and from a location. The time spent conducting the audit is not travel.
7. We evaluate on the anniversary of the employee hire date. Along with the employee we set goals for the year. But there is a minimum amount of audits to be conducted per evaluation year depending on the auditor level (auditor 1, 2, or 3). Then the employee is evaluated mid year for a progress towards their goals. Then the final review is conducted at the end of the year and is score4d and a copy is given to the employee, supervisor, and a copy to Personnel Division. The evaluation forms are standard for the entire Tax Department and have been designed by the Personnel Division.: Tax and Revenue Auditor I: 150Tax and Revenue Auditor II: 175Tax and Revenue Auditor III: 200
8. Yes and Yes. We require the supervisors to perform the evaluations and we track when they are due and send reminders if they aren't conducted timely. Employees with a poor evaluation will not be selected for promotion.
9. Employees with a poor evaluation will not be selected for promotion if their performance is very low, the employee will need to follow an improvement
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plan designed for them by their supervisor. Failure to follow the plan or improve may lead to dismissal.
10. Our pay scale is set by the Department of Personnel and is based on pay grade. All newly hired auditors begin at the same salary around $25K. They have a chance to be promoted to an auditor 2 and then to an auditor 3. We offer good benefits such as 13 paid holidays a year and new hire accrue 5 hours of vacation leave per pay period (2 weeks) and 6 hours of sick leave per pay period. The vacation hours increase based on tenure and at the highest is 8 hours per pay period. Also we reimburse travel (per mile driven for in-state and air line ticket for out-of-state), have a per diem meal allowance for over night stays, pay miscellaneous travel expenses such as parking and portage, also we reimburse for internet connection at their homes.
11. We have 1 week in-house training on using the various computer software and then the auditors train with a tax auditor 3 on the job.
12. Yes preferred by e-mail.
Wisconsin’s response
1. Our Bureau does audits of all types of entities, including individuals, both in and out-of-state. We administer individual income, corporation franchise/income, sales/use, excise, and miscellaneous business taxes and fees.
2. Historical Staffing Data (FY2009) Office Auditors (Revenue Auditor, Revenue Auditor 3, Revenue Auditor 4, and Revenue Auditor 5) - 93.8 Field Auditors - Large Case (Revenue Field Auditor 6-8) - 49.3 Field Auditors - District (Revenue Field Auditor and Revenue Field Auditor 3-5) - 85.8 Revenue Agents & Tax Reps - 19 Support Staff - 27.2 Technology / Analysts - 3 Supervisors / Managers - 24 Total Staffing - 302.1 Vacancies - 46.85 Total FTE - 348.95
3. Audits are generally selected centrally by a group of auditors in our Audit Technical Services Unit. Assignments are distributed based on location and experience. As an auditor progresses in the classification, more difficult cases are assigned. Auditors and supervisors may self select audits but the assignment still goes through our Audit Technical Services Section for a determination of whether the assignment is appropriate. Out of state audits
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are generally more complex and handled by large case auditors, although more senior district auditors may volunteer to do out-of-state audits.
4. Auditors are satisfied with the process although in allowing self selection there is some concern between large case and district auditors of encroachment. That is why it is important there is a central clearinghouse for all assignments. The quality of audits has not always been the best although is improving with more selection based on queries to our data warehouse.
5. Office auditors generally specialize in one of the three major tax types (individual, corporation and pass-through, sales/use). The excise taxes are handled by a separate section. Field Auditors must audit for all tax types we administer (except excise tax). Some auditors may focus in certain industries because of expertise in past audits. Excise tax field auditors audit for all excise tax types (motor fuel, alcohol beverage, and cigarette/tobacco).
6. We do not collect historical travel time data.
7. Each year, auditors and their supervisor discuss goals for the coming year (number of audits to complete, complexity of audits, and other assignments). The performance of the auditor is then evaluated each July. In addition to the number of audits completed, performance is also measured by grades they received for audits turned in (complexity, completeness of workpapers, understanding of issues, etc.), feed back from taxpayers that were audited, and work on other projects. We do look at revenue change - total of assessments and refunds, although it has no significant impact on performance ratings. Auditors under union contracts are rated satisfactory or unsatisfactory. Those rated unsatisfactory are generally placed on some type of performance improvement plan. Outside of the general rating process, section chiefs and/or the bureau director communicate by letter acknowledging those with more than satisfactory performance and those who need to improve or face an unsatisfactory rating in the future.
8. Yes.
9. Our union contracts prohibit discretionary compensation awards based on merit. Non-monetary incentives include semi-annual customer service and innovation awards, more out-of-state travel if desired, inclusion of special project teams, invitations to meet with upper management, letters of commendation, etc.
10. See the attachment from our last major recruitment in 2008.
11. All of the above. Class room training for office auditors is approximately three months spread out over the first year. Class room training for field
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auditors is approximately six months. Job shadowing is part of the field audit curriculum. New auditors once assigned to the field will audit with an experienced auditor for four-six audits. Auditor conferences are held at least once each year for training and many of the units have quarterly or semi-annual training days.
12. Yes.
Wyoming’s response
First of all, I should clarify that we (The Wyoming Department of Audit) are a separate department from the Wyoming Department of Revenue, Wyoming Department of Transportation and the Secretary of State. This is unusual compared to the other states. In most states, the audit function is in the Department of Revenue. Our Division (Excise Tax) conducts audits for the Department of Revenue, the Department of Transportation and the Secretary of State.
1. For the Department of Revenue, we audit in state and out of state companies for sales taxes and cigarette taxes whether they are large or small. We also audit individuals for sales taxes. For the Department of Transportation, we audit fuel taxes, IFTA (International Fuel Tax Agreement) and IRP (International Registration Plan).
2. I’m the administrator and along with me I have 3 managers, 1 admin person and 16 auditors broken down as 3 principal auditors, 5 senior auditors and 8 auditor II positions.
3. We do have one out of state auditor in Houston, Texas. He audits many of the large oil companies which are audited cyclically. I doesn’t make a difference whether the audits are in state or out of state when assigning audits. Typically we assign the difficult audits to the most experienced auditors. For the most part, the auditors have a say in the audits they are assigned. Risk assessment plays a big part in what audits are assigned. Also, the auditors may have spin-off audits from audits they have done. When you are conducting an audit on a company, you may find other companies that are either buying or selling to the company you are auditing. If these other companies are in non-compliance with the tax laws, they become a spin-off audit which means they will be added to the audit list.
4. I think so for the most part. We are always looking for better ways of doing risk assessment.
5. We have 4 auditors that specialize in the IFTA/IRP area, 1 auditor that mainly conducts fuel tax and cigarette audits but also conducts sales/use tax audits and the rest of auditors conduct sales/use tax audits. All of these
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auditors conduct Secretary of State audits corporate tax audits.
6. Since we stationed an auditor in Houston our travel out of state is less. We probably travel 60 to 70 percent of the time in state and the rest of the time out of state. Our auditors are out of the office around 50 % of the time.
7. If you are talking about personnel appraisals, we do a mid-year review and an annual appraisal where 9 standard are rated along with whatever goals and work activities were established at the beginning of the appraisal year.
8. I think the personnel, for the most part, do their best to follow the review system. There are always exceptions. I think it could be more effective. I think it’s too generic now. We used to have 22 standards and now we have 9. We have a lot of subjects compressed into 9 standards. It makes it harder, in my opinion, to go into depth on someone’s appraisal.
9. We try to pay them a competitive wage and promote them when there are opportunities. We are at the legislature mercy when it comes to pay raises. The last few years the legislature has been fair with the raises. There are no bonuses.
10. One of the benefits is health care and a very good retirement package. We do try to make our salaries competitive with outside firms. Most of the time promotions are available when a person has reach that level.
11. We offer on the job training and class room training. There are times when we can make use of training on a national basis.
12. Yes.
Colorado Department of Revenue Survey to Auditors
We sent out the following survey to the auditors at the Colorado Department of Revenue Field Audit Division:
We are some of the accounting students from the Leeds School of Business at CU-Boulder. We are doing a semester-long project for the Colorado Department Revenue, focusing on the efficiency of the current audit assignment and employee review processes. Tammy L. Sorensen, a senior revenue agent, has been our liason for this project.
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At the end of the semester, we will present our recommendations based on the information that we gather. We think that it is very useful to get some input from Colorado Department of Revenue agents regarding what they think about the current processes and what kind of changes they want to see at the Colorado Department of Revenue.
We have created the following survey to gather input from agents and we will make some of our recommendations to the Department based on your answers. We would really appreciate if you could email your responses for the survey questionnaires to [email protected] or [email protected] to maintain the anonymity of the survey,
Let us know if you have any further questions about the project.
Thank you.
Bishop Bhandari
Brandon Dyer
Daniel Deshe
Torrence White
1. What level auditor are you? 2. How long have you been with the Colorado Department of Revenue?3. How do you feel about a seniority-based audit assignment process?4. How do you choose your preferences when selecting an audit (location, type
of industry, etc.)?5. Do you think a skill-based audit assignment process would work in your
group?6. How effective do you think the performance evaluation process is currently
in communicating responsibilities to employees?7. Does the performance evaluation process motivate you to do your best?8. What are some of the criteria that you feel should be used as a basis to
evaluate your performance?9. If you see the assignment process changed, would that motivate you or
would you lose your motivation?10. Do you think it would be better to have a different process for in-state and
out-of-state audit assignments?11. What motivates you to go above and beyond your job responsibilities?12. How do you feel about working in an environment where you are motivated
by intrinsic motivational techniques?13. Is your skill set best matched to the audits that you perform? 14. How do you feel about the current second auditor assignment process?
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Here are the responses:
Response 1:
1. Revenue Agent II2. Six and a half years 3. I think it is a reasonable way to distribute the more desirable in-state audits.
However, for Denver metro area audits, it is better to be able to choose based on location.
4. I normally choose primarily based on location of the audit. 5. Yes. Ideally, an auditor should be trained by more experienced agents as the
agent progresses from easier audits to more complex. If an agents progress with the more difficult audits is properly documented, then assignments could be matched to the skill lever of the agent.
6. The current evaluation process is adequate. Basically, our current system provides the performance expectations at the beginning of the cycle, provides for a mid-cycle counseling with the supervisor, and finally a formal evaluation at the end of the evaluation cycle. As with any evaluation method, the process is only as effective to the level management communicates to subordinates how well the subordinate is performing on a routine basis.
7. No. The current process includes only 3 levels – Needs Improvement, Good, and Exceptional. Because it is very difficult to obtain an Exceptional rating, most individuals receive a rating of Good. Additionally, since the state went to a “Pay for Performance System” which has not been funded for years, the incentive to achieve a high rating is, for the most part, non-existent.
8. Effective use of time spent on an audit. Clear communications with the taxpayer. Quality of the audit write-up.
9. It would probably cause a lack of motivation, if we were not able to have some input on the assignments (such as not being able to provide a list of desire locations/audits to the selection team for in-state or local audits).
10. Probably not.11. I am motivated by a desire to do a good job and to provide a service to the
taxpayer. 12. Okay.13. Yes, for the most part. However, every audit is different and you cannot
always anticipate the issues that will be encountered.14. I’ve been assigned to a couple of audit’s as a second auditor for almost two
years and have not been out with the primary auditor yet. I think it would be a better process to assign a second auditor only to audits that are currently scheduled with the taxpayer. It would better serve the junior auditor that may need the experience or training to meet evaluation standards.
Response 2:
1. Revenue Agent III (Sr. Auditor)2. Six years
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3. It would be better if skill level was taken more into account, but since that is highly arbitrary, it is understandable to stick with a more defined structure.
4. Location, then company and industry.5. As mentioned, it would be difficult to quantify skill levels. If a reasonable
system could be worked out, it would certainly be an improvement.6. I have not seen a situation before where the same words result in such vastly
different interpretations. Some agents seem to need to nail the wording to specifics, in order to remove any potential managerial reinterpretation.
7. Currently, the performance reward process is a dis-incentive. There is no incentive to perform at one’s best, since there is absolutely no reward to do so. I am self-motivated to do my best, but others are not, and it creates frustration.
8. Hours per audit, production (change in tax) per audit hour.9. Since there is little motivation in the assignment process as is, it is hard to
determine the effect of the change.10. No.11. Self-motivation, a desire to do a good job and to help other agents.12. “Token” techniques can be somewhat effective, if utilized properly – if
everyone gets a certificate, then they become meaningless.13. I think it has been. I do feel the training in income tax audits is insufficient,
but each audit can be so different it would be hard to come up with a better solution, other than an extended class with a ‘real-life’ case study or two.
14. I feel the lead agent should have some ‘anonymous’ say in the assignment of the assists before the assists are assigned.
Response 3:
1. Senior2. 10 years3. I feel it is fair4. Location, type of industry, knowledge of the taxpayer5. It would work but it would prevent exposure to areas outside our skill set.6. Not effective at all. When the manager gives a performance evaluation, it is
based on bias and interpretation (or misinterpretation) of a single situation. The evaluation is designed to be fair but it is far from fair. The standardization of review must be established as it currently allows for favoritism of one employee and bullying of another.
7. Not at all. There is no raise incentive, no movement in position, no change or relief of duties, no encouragement, no positive reinforcement, etc.
8. knowledge based on the total process. A question presented to the manager is not a lack of knowledge but a process of clarification, establishing a solid path to complete the assignment. Preparation of files has been scrutinized to the level of intimidation, preventing a normal learning process which would lead to increased job knowledge.
9. The assignment process should allow auditors to choose who they want to
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work with and not allow management to dictate the audit partner. The motivation to work with who I choose is highly rated. To be prevented from working with a particular auditor, being forced to work on an undesirable audit, or having the manager dictate all aspects of the audit would cause extreme loss of motivation.
10. Indifferent.11. When I believe my manager has my back, both with the taxpayer and with
those in the office.12. If it is true, and not for formality purposes, then I would be motivated to
EARN the “reward”. However, if it is understood that the manager would never consider me for such “reward”, then it would not be motivated.
13. No14. See #9 above.
Response 4:
1. Revenue agent II2. 9 years3. fine4. Location.5. No. We don’t know the problems until we dig in the books.6. fine.7. Sometimes.8. Team player. Cant evaluate based on money. 9. No effect. You either have motivation or not.10. Maybe.11. Its not just one answer. You find motivation in every audit. What may seem
silly for motivation may make sense to the auditor. 12. No. Everyone is different.13. Sometimes the answer is yes. 14. That is fine.
Response 5:
1. Revenue Agent III2. 17 Years3. It is a fair methodology.4. Location5. No everyone should be allowed to audit all taxes and not be limited to a
specific area of expertise.6. It depends on the supervisor. They are all different. Some are able to
communicate well and motivate their subordinates. Some do not.7. No, I always try to do my best although I do not expect to always have that
effort acknowledged or rewarded.8. The following are subjective but are should be used in performance
evaluation:
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a. Willingness to accept difficult assignments;b. Organizational skills;c. Helpfulness;d. Social skills; ande. Quality of work.f. The following are objective are should be used in performance
evaluation:Number of audits completed;Lack of significant processing errors;Efficiency measured by the number of hours to complete each audit assignment. Note: Every audit is different but an experience supervisor should have the ability to determine if the number of hours charged is reasonable.
9. It depends. I would need to evaluate the new assignment process to determine if I was adversely affected.
10. No.11. A sincere kind word from my supervisor.12. I am content with that environment.13. Yes.14. Great, I have been assigned capable agents to work with on my audits.
Response 6:
1. Revenue Agent II2. 4 years3. I think it is just fine.4. location, type of industry, talking with prior auditors5. no6. satisfactory7. No. The current process evaluates 99% of employees as “good”. The whole
evaluation process is geared to making everyone equal – which we are obviously not. (At least, it is obvious to some of us who haven’t fallen for the current socialist agenda). So there!
8. Current criteria is satisfactory.9. Changed to what?10. I don’t do out-of-state audit assignments so I don’t care. 11. What I find while doing the audit.12. I think I would feel violated. What are you talking about?13. yes14. No feelings what so ever about the process.
Response 7:
1. Revenue Agent III
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2. 20 years3. Love it4. Type of audit, income first with potential, intriguing aspects.5. yes6. Sufficient7. no, The switch to pay for performance 19 years ago was supposed to have
taken care of this, but the legislature has only funded it fully once. No much incentive
8. quality and quantity of work9. not at all, I will go anywhere, it does not matter who or what I audit10. no11. I do it on a normal basis, so I guess receiving a paycheck each month does it
for me.12. what does this mean13. yes14. what is this? Not sure what you are talking about.
Response 8:
1. Revenue Agent II2. Four years starting in January3. It’s fine4. Location first, then type of industry, then size5. Only if someone specializes in something. We already have a group that
specializes in a certain tax that other Revenue Agents don’t do. Agents have been put on an audit because they have experience that no one else does. It’s a case by case process when it comes to skill sets.
6. Not very. There are goals but nothing more.7. No. There are no incentives to do better. Several agents do more than what
is expected and do not receive anything in return. Few agents are rewarded and it tends to be the same agents every time. Not every agent is given the opportunity to do more than what is required of their job. It is given to a few individuals without giving everyone else a chance.
8. If someone turns in more audit hours than is required, more quantity of audits than is required, and does something extra that no one else does then they should be rewarded as equally as someone else who does the same or more than someone who doesn’t.
9. It depends on how it’s changed.10. Yes. Not assign an agent to do two audits in one week (instate) for
companies that are accidentally designated as small audits when in reality they have grown and would normally take at least two weeks to complete. There needs to be some sort of screening process before audits are assigned.
11. Personal integrity.12. If everyone received an equal reward when achieving beyond the goals. I
think assignment by seniority is fine because those agents have put in more years than everyone else. Therefore, they have more knowledge and
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experience and know what their strong points are.13. Not really. I perform all different types of audits. I have to do great at each
different company I audit. 14. I think you are referring to the assisting agents. Usually seniors are the lead
and everyone else assists on large case audits. I am a lead on everything in my new assignments and I have to do senior work (large case audits). It’s flattering and frustrating at the same time because there is no consistency. However, I do believe they assign based on the auditor’s skill set as well – hence why it’s flattering. It is fair in that the assisting agent gets an audit that is close to their residence. The good thing is that each agent gets to put down their top choices in the hopes they will receive them. I never got put on an audit, except for special projects, that I did not request. In that respect it is fair. Everyone has to do special projects every now and then.
Response 9:
1. RA12. 14 months3. On one hand it is fair because they have earned their seniority. On the other
hand, it leaves all of the less desirable audits for the lower level agents, which is not fair to the lower level agents. Overall, I don’t mind it because sometimes the less desirable audits turn out to be better audits and I prefer some of the less desirable locations.
4. Zip code.5. Possibly, as long as an individual agent doesn’t get stuck auditing only one
type of business or even primarily one type of business. I think each agent should have at least five different industries to audit to prevent the agent from getting bored and there should be multiple agents for each industry. However, it would be extremely beneficial to have agents audit areas where they are better at auditing.
6. I think it works well enough. It is not exceptional, but it serves its purpose.7. Not always because there is no reward attached to the performance
evaluation at this time. However, I still want to get a great review.8. So far, I like the way performance evaluations are done.9. Would not change my motivation.10. Does not apply to me.11. Desire to succeed and progress in my career.12. It works for some people, but most people need some sort of external
motivation as well, whether it is rewards or praise or something else. I work hard and I meet/exceed expectations, but if a bonus or pay raise were attached, I would probably focus on exceeding expectations more than I already do.
13. Somewhat; as you do more audits your skill set becomes broader and really the only way to broaden your skill set is to do different audits. I would say
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my skill set is “matched” to the audits I am doing, but not always “best matched.”
14. No experience.
Response 10:
1. Senior2. 6 years3. I agree with it.4. Location, recommendation and then industry.5. This is an interesting question. One could assume that with seniority, skills
have been acquired and that the seniors have the most advanced skills. If this is not the case, assignments based on skill could be challenging depending on if the skilled agent, whom I assume is the lead agent, is working alone or with others, and the other’s seniority level.
6. With my supervisor and me, it works well.7. Somewhat, as I do value feedback on how others, my supervisor in particular,
perceive my work. But I also receive feedback on each audit file that I complete, not just from the performance evaluation. I am actually motivated to do my best because of who I am and the fact that I was raised to be a hard working and ethical person. I strive to meet expectations and if possible to do more and give more than expected. As a result, my evaluations have been positive.
8. I believe that the five core competencies and five job performance factors currently used to evaluate my performance in addition to my IPO are all worthy criteria.
9. I don’t believe it would have an affect, but I am not sure that I understand the question, motivate me to what?
10. Different is not necessarily better. It would depend on the different process. I am not unhappy with the current process.
11. See my answer to number 7.12. Another interesting question. Are you implying that we do or do not
currently work in an environment where we are motivated by intrinsic motivation? I believe my responses to the other motivational questions indicate that I am a person primarily motivated intrinsically. I will admit that the salary and benefits that come with my position motivate me as well, I do believe in earning my pay. Some day, after I retire, I hope to be able to contribute the time currently consumed by work to society without the financial rewards.
13. As a senior assigned senior level audits, I have been required to learn new skills and material thereby challenging myself to meet the expectations of the assignment.
14. I agree with the second auditor assignment process. I have yet to have an issue with those I have been assigned to work with or those who have been assigned to work with me.
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Response 11:
1. Revenue Agent IV – Out-of-State Revenue Agent2. over 17 years3. This out-of-state office currently only has one employee; so a seniority-based
audit assignment process would not be feasible.4. Out-of-state audits are selected primarily based on potential production, size
of the company, whether or not the company has been previously audited, and location (i.e. within daily commuting distance to the taxpayer’s office).
5. Again, since this office currently only has one employee, a skill-based audit assignment process would not be feasible.
6. The current performance evaluation process sufficiently communicates employee responsibilities.
7. Not really.8. The criteria already established in the performance evaluations are
sufficient.9. It would have no effect on my motivation.10. As an out-of-state office, this question does not really apply.11. Self motivation.12. I’m not sure what you mean by “intrinsic motivational techniques”. However,
Out-of-state Revenue Agents currently are lone auditors in remote offices. We must be highly self motivated and self reliant to sufficiently and effectively perform our jobs and meet our production commitments.
13. Yes.14. As an out-of-state office with only one employee, this question is not
applicable.
Research from CPA Firms and Managers
Interview Type: CPA FirmFormer Auditor Currently Finance Director for National Ski PatrolName: Wayne Block(720) 963-2620
1. What is your audit assignment process? Auditors do not have a say in audits Assign based on skills and past audits
2. What is your opinion of the current audit assignment system? Good system The most efficient way to do it Wouldn’t change it
3. Does the firm conduct performance reviews?
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Yes Reviews used to evaluate auditors Identify different skills Accuracy and following the correct rules are factors
4. Do you do out-of-state audits? Yes
Interview Type: CPA Firm AuditorLR Compton AuditorsName: Less(720) 373-5183
1. What is your audit assignment process? Auditors get assigned to audits Some selected by type of industry Past experience and skill play important roles
5. What is your opinion of the current audit assignment system? The system makes the most sense Auditors should go on audits that they are good at Wouldn’t change anything
6. Do auditors undergo performance reviews? No but all their work is reviewed Knows that others do
7. Do you do out-of-state audits? Yes
Interview with a Tax Manager at a Xcel Energy.1. Are you satisfied with your job? – Yes.
2. How are employees motivated to work hard and go above and beyond their job responsibilities? – We value our employees. So we provide them with both intrinsic and monetary benefits in term of promotion.
3. How are the employees evaluated and who provides the feedback on their performance? - We have a very detailed information system that allows employees themselves to evaluate them, and that is later reviewed by their immediate manager.
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4. How do you feel when you get notice from states that your company will be audited? – We are used to audits. It is just a regulatory process. We are on top of most of the tax issues so we just take that as a normal business process.
5. How often do you get audited? What do you think is the reason that you get audited? – At least once a year. We get audit from several states as we have jurisdiction in various states. The primary reason that we get audited that we have a very complex business structure so there is a high chance that our internal controls may not be effective, and States often think that they can get more revenue by going after bigger companies.
6. What are some of the things that you feel that the auditors coming to audit should know prior to actually coming for an audit? – It all comes down to being efficient at their work and being clear on what their scope is. They should have a clear audit plan in advance. Also, it is important that they value our employees’ time. We don’t want them asking us questions that they should be familiar with just by looking at their prior year audit works.
7. What kind of things, if not being done so far, do you think would make both auditors and company employees go through the auditing process smoothly? – I think Colorado Department of revenue should get rid of the the home-rule and bring uniformity in the audit with all other states. I know it is a complicated issue as they would have to go through legislation, but somebody has to make the first effort. Other things might be just being proactive and helping us with fixing our internal controls. That would help both the parties.
Research from Protiviti Website
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