Workshop Daily Summary – Wed Feb 26, 2014

What Happens During an IFTA/IRP Audit?

Haven’t had your IFTA/IRP records audited yet? You can be randomly chosen, and if you are, you should know what to expect.

IFTA and IRP are both “base jurisdiction” programs. The base jurisdiction is the member jurisdiction where your vehicles are based for registration purposes and where operational control and operational records for those vehicles are maintained or can be made available.

When you’re audited, someone from your base jurisdiction will do the job.

While you might think the rules should be the same regardless of where you’re based, each province and state has its own audit standards and procedures. Not only that, each individual auditor has at least some discretion in how he applies the rules.

Wednesday’s sessions at the IFTA/IRP Audit Workshop in Ft. Lauderdale covered each step in the audit process with the opportunity for the audience to comment or ask questions.

Here’s a review of each step, along with some perspective to help you as a licensee have a reasonable or even an excellent audit result.

 

PRE-AUDIT

Phase where the auditor is collecting data about the company and starting to get an understanding of the company’s data. In most cases, the auditor will look at the records for both programs, but sometimes a jurisdiction may audit for only IFTA or only IRP.

 

INITIAL CONFERENCE

A series of well-thought-out questions by the auditor will shed light on the licensee, its operation, and systems. If this phase is not properly completed or you don’t give enough or enough of the right information, you may not get good audit results.

 

INTERNAL CONTROL – TESTING & DOCUMENTATION

The licensee has a SOP (Standard Operating Procedure) and a process in place to properly and accurately report the data. Strong internal controls can give the auditor more confidence in the entire system. For the company, having strong internal controls should lead to more accurate reporting and therefore a better audit result.

 

SAMPLING TECHNIQUES AND METHODOLOGIES

Each jurisdiction has its own method to produce a representative sample of vehicles to conduct the audit. This varies by the type of equipment and goods carried, the area of operation, and fleet size. The licensee should be aware of the sample the auditor is using and ensure that it is representative of its fleet operations.

 

AUDITING DISTANCE

Compared to manual trip records, GPS is quickly gaining acceptance as an accurate, efficient method of distance collection for IFTA and IRP reporting. As the FMCSA moves closer to the requirement of tracking hours of service electronically, using GPS for fuel tax reporting is destined to become common-place.

Ping frequency is variable depending on the system. Too frequent a ping rate will create a data storage and auditing nightmare. It’s more important to have consistency and that the method of distance calculation and jurisdiction assignment be in line with the ping frequency and the type of operation.

 

AUDITING FUEL

The MPG/KPL analysis is extremely important: it tells a story. The auditor will do a thorough analysis of each vehicle’s MPG/KPL to start the audit of the data. He’ll see if you have valid receipts to prove that tax was paid on the purchase. It’s not the auditor’s job to recreate your trips or to manage your reporting. Typically, auditors will work with you to let you find and give them missing data.

If you estimate fuel purchases, it should only be in terms of adjustment where you may be missing a fuel receipt. Without the fuel receipt, you can’t take credit on the return and end up paying the tax twice: once at the pump and then again when you file the return. Missing fuel will, in most cases, be the biggest red flag in a large audit assessment.

 

FINAL CONFERENCE & REPORTING OF FINDINGS

Once the audit is complete, your auditor will write up a report and send it along with the results for your review. Depending on the program, you have 45 days to appeal the findings. The findings are also reported to any affected jurisdictions.

There is a provision to allow for jurisdictions to re-audit the carrier if they don’t agree with the findings of the base jurisdiction audit.

You can find copies of the presentations on the IFTA website at (www.iftach.org).  On the homepage click on the link for the IFTA/IRP Workshop, then click on Meeting Materials.

IMG 0212

Meet some of the people from IFTA, Inc.  L-R:  Lonette Turner (CEO, CFO), Patricia Platt (Program Compliance Administrator), Debbie Meise (Senior Director), Tammy Trinker (Office and Events Coordinator)

1 Comment
  1. Wonderful summary of the day, Sandy! Thanks for sharing it with us!!

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