standards vs. procedures auditing standards differ from auditing procedures. procedures are acts...
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Standards vs. ProceduresStandards vs. Procedures
Auditing standards differ from auditing Auditing standards differ from auditing procedures. Procedures are acts that the procedures. Procedures are acts that the auditor performs during the course of an auditor performs during the course of an audit in order to comply with the audit in order to comply with the standards.standards.
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G A A SG A A SGGenerally enerally AAccepted ccepted AAuditing uditing SStandardstandards
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OVERVIEWOVERVIEW
Issued by the American Institute of Issued by the American Institute of Certified Public Accountants – AICPACertified Public Accountants – AICPA
Defined in the Statements on Auditing Defined in the Statements on Auditing Standards - SASStandards - SAS
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General StandardsGeneral Standards
Field Work StandardsField Work Standards
Reporting StandardsReporting Standards
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SAS 95 & 98SAS 95 & 98
General StandardsGeneral Standards Adequate proficiency and training as an Adequate proficiency and training as an
auditorauditor• The audit is to be performed by a person having The audit is to be performed by a person having
adequate technical training and proficiency as an adequate technical training and proficiency as an auditor.auditor.
IndependenceIndependence• An independent mental attitude is to be An independent mental attitude is to be
maintained by the auditormaintained by the auditor
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Due Professional CareDue Professional Care Due professional care is exercised in the Due professional care is exercised in the
performance of the audit and preparation of performance of the audit and preparation of the report.the report.
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Standards of Field WorkStandards of Field Work
Planning and SupervisionPlanning and Supervision
The work should be planned and any The work should be planned and any assisting auditors should be assisting auditors should be supervised.supervised.
Understanding the basic characteristics Understanding the basic characteristics of the clientof the client
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Internal controlsInternal controls
• Internal controls should be evaluated Internal controls should be evaluated as a basis for relying on the records as a basis for relying on the records for testing/samplingfor testing/sampling..
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Sufficient evidential matterSufficient evidential matter
Records, observations, inquiries and if Records, observations, inquiries and if necessary 3necessary 3rdrd party records should be party records should be used in determining reliable audit used in determining reliable audit results.results.
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Standards of ReportingStandards of Reporting Basically apply to financial auditing, not Basically apply to financial auditing, not
tax/fee compliancetax/fee compliance
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How do the standards relate to How do the standards relate to IFTA and IRP auditing?IFTA and IRP auditing?
Both the Agreement and the Plan Both the Agreement and the Plan address these standards in their address these standards in their respective Audit Procedures Manuals.respective Audit Procedures Manuals.
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General StandardsGeneral Standards
Adequate training and proficiencyAdequate training and proficiency
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A200 General StandardsA200 General Standards
• .100 Training and Proficiency.100 Training and Proficiency Auditors should have adequate technical training and Auditors should have adequate technical training and
proficiency as outlined in Section A400.proficiency as outlined in Section A400.
Section A400 – Personnel Qualifications and Section A400 – Personnel Qualifications and ResponsibilitiesResponsibilities
• A410 AdministrationA410 Administration• A420 Audit StaffA420 Audit Staff
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
Article 2 - General Accounting and Auditing Article 2 - General Accounting and Auditing StandardsStandards
• 201. Training and Proficiency201. Training and Proficiency• The audit is to be performed by a person or The audit is to be performed by a person or
persons having adequate technical training and persons having adequate technical training and proficiency as an auditor.proficiency as an auditor.
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IndependenceIndependence
An independent mental attitude is to An independent mental attitude is to be maintained by the auditor.be maintained by the auditor.
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IFTA – Audit Procedures IFTA – Audit Procedures ManualManual
A200.200 Auditor IndependenceA200.200 Auditor Independence
• Auditors should maintain independent Auditors should maintain independent mental attitudes in relating to audit mental attitudes in relating to audit assignments. The auditor must be without assignments. The auditor must be without bias with respect to the licensee under bias with respect to the licensee under audit to ensure impartiality. This audit to ensure impartiality. This independence is an obligation to fairness.independence is an obligation to fairness.
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IRP – Audit Procedures Manual IRP – Audit Procedures Manual (proposed)(proposed)
Article 2, 205. Auditor IndependenceArticle 2, 205. Auditor Independence Free from personal and external Free from personal and external
impairments to independenceimpairments to independence Independent mental attitudeIndependent mental attitude Without bias with respect to RegistrantWithout bias with respect to Registrant Maintain impartialityMaintain impartiality
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Due Professional CareDue Professional Care
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A200 – General StandardsA200 – General Standards .300 Professional Care.300 Professional Care
Professional care should be exercised Professional care should be exercised during the audit field work and in during the audit field work and in preparing the Interjurisdictional Audit preparing the Interjurisdictional Audit ReportReport
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
Article 2 – General Accounting and Article 2 – General Accounting and Auditing StandardsAuditing Standards
202.Professional Care202.Professional Care Conducted in a professional mannerConducted in a professional manner Results clearly documentedResults clearly documented Uniform programUniform program
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Standards of Field WorkStandards of Field Work
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Planning and SupervisionPlanning and Supervision
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A220 Examination StandardsA220 Examination Standards .100 Preaudit analysis.100 Preaudit analysis
• Preaudit analysis shall be conducted and Preaudit analysis shall be conducted and documented. documented.
Reported informationReported information TrendsTrends
A410.200A410.200 …….There must be supervisory follow-up and .There must be supervisory follow-up and
review of the auditor’s proceduresreview of the auditor’s procedures
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
Article 2, 204 – Adequate Planning and Article 2, 204 – Adequate Planning and SupervisionSupervision
Field work adequately planned and Field work adequately planned and supervisedsupervised
Standardized audit program Standardized audit program (checklist)(checklist)
Report and work papers reviewed Report and work papers reviewed and and approved by Audit Supervisorapproved by Audit Supervisor
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Internal ControlsInternal Controls
Trip Sheets
Summaries
Returns/Registration
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A220.200 Examination StandardsA220.200 Examination Standards Study and EvaluationStudy and Evaluation
• Internal accounting should be evaluated in order to Internal accounting should be evaluated in order to determine if the licensee’s records can be determine if the licensee’s records can be depended on in order to perform a sample.depended on in order to perform a sample.
A640 Evaluation of Internal controlA640 Evaluation of Internal control .100 Review and documentation.100 Review and documentation
• Information-gathering phaseInformation-gathering phase• InquiryInquiry• observationobservation
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• Changes in the accounting systemChanges in the accounting system• Records retainedRecords retained• Supporting documentationSupporting documentation• Identify weaknesses in the systemIdentify weaknesses in the system
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
203. Study and Evaluation203. Study and Evaluation Registrant’s reporting systemRegistrant’s reporting system
• StudyStudy• EvaluateEvaluate
Sampling test work and projectionsSampling test work and projections• Reliability of internal accounting controlsReliability of internal accounting controls• Impact of any weaknesses in the controlsImpact of any weaknesses in the controls
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Article 7Article 7 702. Evaluation of Internal control702. Evaluation of Internal control
• Review and documentationReview and documentation• Tests of complianceTests of compliance• Report on weaknessesReport on weaknesses
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INTERNAL CONTROLS
TYPE EXAMPLES for IFTA & IRP 1. Independent approval, review,
checking or recalculation
Purchases of fuel, checking mileage & odometer computations
2. Matching of independently generated documents
Matching fuel invoices/bulk withdrawals to trip reports
3. Pre-numbering and sequence checking of key documents
Continuous odometer readings Assigning trip numbers
4. Maintenance of independent control totals
Preparing mileage and fuel summaries
5. Comparison with independent third party information
Reconciling fuel invoices to trip reports to vendor statements Reconciling bulk inventory Matching payroll data to trip reports
6. Segregation of personnel, operations, and assets
Segregation of duties among transaction initiation, approval, and recording functions
7. Timeliness of operation Reporting whole trips (mileage & fuel) in the quarter they occurred (ended) Filing quarterly returns
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Sufficient Evidential MatterSufficient Evidential Matter
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SAS 103SAS 103
Requires audit documentation in sufficient Requires audit documentation in sufficient detail to:detail to: Provide an experienced auditor with no Provide an experienced auditor with no
previous connection to the audit a clear previous connection to the audit a clear understanding of the work performed.understanding of the work performed.• NatureNature• TimingTiming• ExtentExtent• Results of audit procedures performedResults of audit procedures performed
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The audit evidence obtained, its source and The audit evidence obtained, its source and the conclusions reached.the conclusions reached.
Requires the auditor to document audit Requires the auditor to document audit evidence that is identified as being evidence that is identified as being contradictory or inconsistent with the final contradictory or inconsistent with the final conclusionsconclusions• How the auditor addressed the contradiction or How the auditor addressed the contradiction or
inconsistencyinconsistency
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A520 Standard ApproachA520 Standard Approach Evaluate licensee’s distance accountingEvaluate licensee’s distance accounting Verify fleet miles/kilometers to source Verify fleet miles/kilometers to source
documentsdocuments Determine if distance accounting properly Determine if distance accounting properly
accumulates all operation distancesaccumulates all operation distances Verify jurisdiction allocationsVerify jurisdiction allocations
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A670 Audit DocumentationA670 Audit Documentation Communicate audit resultsCommunicate audit results Document & justify proceduresDocument & justify procedures Indicate source of audit resultsIndicate source of audit results Communicate suggestions & Communicate suggestions &
recommendationsrecommendations Clearly support audit findingsClearly support audit findings
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A680 Audit File ContentsA680 Audit File Contents .100 Schedules.100 Schedules
• Summary scheduleSummary schedule• Supplementary schedulesSupplementary schedules
.200 Support Documentation.200 Support Documentation• Detail informationDetail information
Actual records reviewed which support audit resultsActual records reviewed which support audit results
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• Detail of retail or bulk purchasesDetail of retail or bulk purchases• Detail of bulk fuel withdrawalsDetail of bulk fuel withdrawals• Analysis of trips auditedAnalysis of trips audited
Listing of Records MaintainedListing of Records Maintained• Indicate what records are maintainedIndicate what records are maintained• If in compliance with the Agreement & the PlanIf in compliance with the Agreement & the Plan
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
Article 2, 206. Working Paper Article 2, 206. Working Paper DocumentationDocumentation Working papers should be sufficiently detailed Working papers should be sufficiently detailed
so that a reviewer (internal or external) can so that a reviewer (internal or external) can understand them without extensive oral understand them without extensive oral explanations….explanations….
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Working papers should:Working papers should:• Provide the principal support for the Audit reportProvide the principal support for the Audit report• Aid in the performance of and review of auditsAid in the performance of and review of audits• Facilitate third party reviewsFacilitate third party reviews• Document whether audit objectives were achievedDocument whether audit objectives were achieved• Document all planning, audit procedures Document all planning, audit procedures
performed and conclusions reachedperformed and conclusions reached
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401.Adequacy of records401.Adequacy of records Consistently product required information to substantiate Consistently product required information to substantiate
applicationapplication Sufficient detail that vehicle movement may be tracedSufficient detail that vehicle movement may be traced Operational records that supportOperational records that support
• Total In-Jurisdiction DistanceTotal In-Jurisdiction Distance• Total DistanceTotal Distance
406. Accountable Distance Traveled406. Accountable Distance Traveled Registrant must record all movementRegistrant must record all movement
• InterjurisdictionalInterjurisdictional• IntrajurisdictionalIntrajurisdictional• EmptyEmpty• DeadheadDeadhead• BobtailBobtail
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Standards of ReportingStandards of Reporting
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IFTA Audit Procedures ManualIFTA Audit Procedures Manual
A660 Audit ReportsA660 Audit Reports .100 Licensee Audit Report.100 Licensee Audit Report
• Name and Address of licenseeName and Address of licensee• Account NumberAccount Number• Audit PeriodAudit Period• Types of records auditedTypes of records audited• Description of audit techniquesDescription of audit techniques• Net distance adjustmentsNet distance adjustments• Net tax paid fuel purchases adjustmentsNet tax paid fuel purchases adjustments
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• MPG/KPL as reportedMPG/KPL as reported• Net fuel tax adjustment per jurisdictionNet fuel tax adjustment per jurisdiction• Remarks and recommendationsRemarks and recommendations• Signature of auditor or reviewing official and dateSignature of auditor or reviewing official and date
Interjurisdictional Audit ReportInterjurisdictional Audit Report• Name of base jurisdictionName of base jurisdiction• Name and address of licenseeName and address of licensee• FEI or equivalentFEI or equivalent• Reported tax by jurisdictionReported tax by jurisdiction• Audited tax by jurisdictionAudited tax by jurisdiction
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• PenaltyPenalty• Interest by jurisdictionInterest by jurisdiction• Total by jurisdictionTotal by jurisdiction
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IRP Audit Procedures Manual IRP Audit Procedures Manual (proposed)(proposed)
Article 8Article 8 802. Registrant Audit Report802. Registrant Audit Report
• Name and address of RegistrantName and address of Registrant• Account number and Fleet numberAccount number and Fleet number• Registration Year(s) auditedRegistration Year(s) audited• Distance traveled and percent as originally filedDistance traveled and percent as originally filed• Distance traveled and percent as a result of AuditDistance traveled and percent as a result of Audit• Amount of percent factor changeAmount of percent factor change• Net fees due each Member JurisdictionNet fees due each Member Jurisdiction
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Remarks, recommendations, Remarks, recommendations, observations, and findingsobservations, and findings
Identification of any Power Units removed Identification of any Power Units removed from the Fleet w/full fees assessedfrom the Fleet w/full fees assessed
Date of issuance and name of the Date of issuance and name of the auditor(s)auditor(s)
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803. Interjurisdictional Audit Report803. Interjurisdictional Audit Report Evidence of timely notification to other Evidence of timely notification to other
jurisdictionsjurisdictions• Name of Base JurisdictionName of Base Jurisdiction• Name and address of RegistrantName and address of Registrant• Account numberAccount number• Registration Year(s)Registration Year(s)• Number Apportionable VehiclesNumber Apportionable Vehicles
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Reported Jurisdiction distanceReported Jurisdiction distance• In-jurisdiction distance percentagesIn-jurisdiction distance percentages• Apportionable feesApportionable fees
Brief narrativeBrief narrative Date of issuance and name of the auditor(s)Date of issuance and name of the auditor(s) Statement on adequacy of distance Statement on adequacy of distance
accounting systemaccounting system
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SUMMARYSUMMARY
Both the Agreement’s and Plan’s Audit Both the Agreement’s and Plan’s Audit Procedures Manuals follow Procedures Manuals follow GGenerally enerally AAccepted ccepted AAuditing uditing SStandards to the tandards to the degree in which these standards are degree in which these standards are applicable their respective audit situations.applicable their respective audit situations.
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It is the responsibility of each member It is the responsibility of each member jurisdiction to insure that all audits are jurisdiction to insure that all audits are conducted in accordance with these conducted in accordance with these standards and are applied fairly, without standards and are applied fairly, without bias, to each licensee and registrant.bias, to each licensee and registrant.