Forms and Documents
This is a carefully thought-out, flexible written document and is the first step in the audit procedure.
What is an audit program?
The name for an examination of any record, data or detail to determine whether to proceed or accept as correct the item being tested
What is a short or preliminary test?
Generally, the use tax is the liability of the ____________.
What is the purchaser?
The audit approach where reliance cannot be placed upon the formal accounts and includes any method used to impeach records.
What is an indirect approach?
The primary objective of the audit program is to determine, with the least expenditure of time ____________________.
What is the correct measure of tax?
This correspondence is used to confirm arrangements to begin audits or establish contact with the tax/feepayer
What is an audit engagement letter?
Name the two broad categories of testing used in sales and use tax auditing
What are block and statistical sampling?
This form can be used to avoid a duplicate assessment of use tax on the same transaction by indicating whether use tax was assessed on the seller, or the purchaser.
What is an 1164, or Memorandum of Possible Tax Liability?
When using this specialized technique, the auditor must be alert for cash expenditures and withdrawals from cash receipts prior to deposit.
What is a bank deposit analysis?
The name of the meeting between the taxpayer and CDTFA staff prior to the start of the audit to discuss the availability and production of records.
What is a pre-audit conference?
A written document signed by the taxpayer to appoint a representative to act on their behalf.
What is a Power of Attorney, or CDTFA-392?
The program that uses a percentage developed in a prior audit for the sales or accounts payable portion in one or two subsequent audits.
What is a prior percentage of error (PAPE)?
These retailers are required to register and collect use tax on sales made in this state if they are engaged in business in this state
What are out of state retailers?
The method in which an amount is added to cost to obtain the sales price and is generally referred to in terms of percentages.
What is the markup method?
The basis of an audit conducted on verification of taxable differences as compared to an audit performed on a total sales and claimed deduction basis
What is taxable measure basis?
The form used to document and provide a written request for information/documentation when the taxpayer fails to provide the records in response to verbal requests.
This is the point in the audit program where the auditor has accumulated sufficient data to make a decision whether the audit should be waived as non-productive.
What is cut off point?
Under certain circumstances, when a vehicle, vessel, or aircraft is purchased outside of California, is first functionally used outside of California and is brought into California within _____________ from the date of purchase, it is rebuttably presumed to have been acquired for storage, use or other consumption in California and is subject to use tax
What is 12 months?
This specialized technique assumes gross profit equals increases in capital assets, operating expenses, and net withdrawals of the proprietor.
What is gross profit and net worth analysis?
***DAILY DOUBLE***Testing to support substantial change recommendations must include this so that the report is understandable and can be evaluated by subsequent readers.
What is explanatory verification comments?
This form is to establish the most efficient means of developing a sampling plan and document: (1) the sampling method that will be used to determine a percentage of error in the population being tested and (2) the projection of the sample units.
What is the 472 Audit Sampling Plan?
The use of this data requires the auditor to inform the taxpayer they are doing so at the time the audit is being conducted.
What is third-party proprietary data? FAM 0405.32
An examination of __________ in the general ledger asset and expense accounts should be examined to verify sales tax was added to purchases made from out of state vendors.
What are debits?
This specialized technique is typically used in liquor store audits when the markup on total sales is acceptable but the markup on taxable sales is low
What is a markup on exempt food products?
This hands on procedure will help the auditor to understand many of the features of the taxpayer's operation and should be conducted in the beginning of the audit, for smaller businesses, or after the audit is started, for larger firms.
What is a tour or survey of the taxpayer's business?