Audit System Manual graphic

[ Audit System Manual- TOC ] [ Ch 1 - Introduction ] [ Ch 2 - Preparing for an Audit ] [ Ch 3 - Conducting the Audit ] [ Ch 4 - Completing the Audit Forms and Schedules ] [ Ch 5 - Audit System Screens ] [ Ch 6 - Miscellaneous ] [ Ch 7 - USDOL - Tax Performance System ] [ Ch 8 - Computer Fundamentals & Hardware ] [ Appendix ]
[ 1.1 - Objectives of a Field Audit Prg ] [ 1.2 - Definition of a Field Audit ] [ 1.3 - Purpose of an Audit ] [ 1.4 - Authority to Review Records ] [ 1.5 - Classification of Audits ] [ 1.6 - Audit Scope ] [ 1.7 - Required Audit Scope ] [ 1.8 - Tolerance/Expanding the Audit ] [ 1.9 - Audit Quota ] [ 1.10 - Audit Selection ] [ 1.11 - Audit Assignment Control ][1.12 - Components of a Completed Audit] [1.13 - Review Process for Audits] [ 1.14 - Audit Retention ]

Chapter 1: Introduction

comments to: Tax Department

1.10    Audit Selection

Audit candidate selection is prioritized. Accounts Examiners with an audit quota will use the following formula for attaining their audit quota.

  1. State Office Audit Assignments stating that an employer's account must be audited.

    State Office audit assignments will be sent by:
  1. Field Tax (Example: TEU Assignments).
  2. Accounts Section.
  3. Collections Section.
  4. Status Section.
  1. Regional Tax Supervisor's audit assignments to examine the records of a particular employer.

  2. Employers selected through the mainframe Field Tax audit candidate selection routine. The Audit Candidate Screen is a list of employers in the Accounts Examiner's assigned area who have been selected for audit because they have the greatest potential for underreported taxable wages.

    Audit candidates are requested through the SA - Select Candidates for Audit screen, and the resulting candidate list is available via the BC - Browse Audit Candidates screen. A supervisor may view this same information via the SC - Supervisor Screen.

  3. Chargeback Audit List generated quarterly from new employers that have chargebacks.

  4. State Office and Field assignments that did not request an audit but are converted to an audit assignment at the direction of the Tax Supervisor or the Regional Tax Manager. These may include:
  1. Generally, non-audit assignments should not be converted to an audit; however, if:
  1. The Auditor determines the assignment can be completed without converting it to an audit but that a need for an audit exists, the Auditor should complete the assignment and request that the Tax Supervisor issue an audit assignment on the employer in question. The audit would be performed at a later date.

  2. The Auditor determines that the assignment must be converted to an audit in order to complete the investigation, the audit must comply with the minimum scope requirements.

Justification for the conversion to an audit must be reflected in the Comments section of the audit report and should include:

  1. A statement that the information to clear the assignment could not be obtained without conducting an audit. Example: employer under subpoena or,

  2. A statement that conducting the audit was cost-effective. Failure to show cost-effectiveness will result in the audit being rejected. An audit that reflects no change is not cost-effective.
  1. Audit credit will not be given if:
  1. The employer being audited is a reimbursing employer. Reimbursing employers are not included as part of the audit quota calculation.

  2. The employer, even if selected off the audit candidate screens, is not a subject employer for the period audited.

    Example: An audit assignment is received in February, 20YY for the prior year. During the examination the Auditor discovers that the employer is not subject under the TUCA. Audit credit will not be given for the examination of the records.

    Example: An audit assignment is received in February, 20YY for the prior year. Examination of the employer's records shows that no wages were paid by the employer during the prior year. Credit for the prior year audit will not be given.
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Last Revision: May 05, 2011