Auditing in an Electronic Environment (e-Auditing)

If you use a computer to record your business activity and maintain this data electronically, you are a candidate for an electronic audit.

What is e-Auditing?

Electronic auditing, or e-Auditing, is computer-assisted auditing that uses electronic records to complete all or part of the audit. If you use a computer to record your business activity and maintain this data electronically, you are a candidate for an electronic audit.

Benefits of e-Auditing

It saves time -- Electronic audits are completed much faster than manual audits. Company personnel and auditors spend less time completing the audit.
It saves paper -- An electronic audit reduces the amount of paper normally needed during an audit.
It is more efficient -- More efficient techniques for reviewing taxpayer information are used in electronic audits.

Electronic Audit Techniques

The Department uses a combination of purchased and custom-designed software to perform electronic data conversion and analysis. E-Auditing uses various audit techniques, including electronic detail auditing and stratified statistical sampling.

It is common to use more than one technique in the same audit. For example, sales and fixed assets could be audited using the electronic detail technique, while expenses could be audited using stratified statistical sampling.

Electronic Detail Audit

When performing an electronic audit, it may be possible to review every transaction in a file, precluding the need for sampling. If the Department can perform a detail audit within approximately the same amount of time as a sample, a detail audit should be performed.

Sampling

Sampling is taking a segment of a much larger group or population and making a conclusion about the population based on the sample results. Generally, a sample can be conducted much faster than a detail audit and is, therefore, less costly for both you and the Department.

Under Florida Statutes, any taxpayer paying sales and use tax to the Department and filing returns is required to keep records and other information which will allow the Department to determine the correct amount of tax due. Section 212.12(6)(c), F.S., states that the Department may sample a taxpayer's records, except fixed assets, when the records are adequate, but voluminous.

According to s. 212.12(6)(b), F.S., if a taxpayer does not have adequate records of sales or purchases, the Department may project a deficiency from a sample of the taxpayer's available records. There is no provision in s. 212.12(6)(b), F.S., to project an overpayment for taxpayers who do not have adequate records.

Stratified Statistical Sampling

Stratified statistical sampling is a methodology based on statistical theories. Statistical sampling uses random selection of sample points where each record has an equal probability of being selected.

Stratified statistical sampling separates your data into homogeneous groups, called strata, for more accurate analysis. Extreme values are examined in detail and are not projected. If your records are adequate and are available electronically, you may be a candidate for stratified statistical sampling.

Frequently Asked Questions

If I maintain my data electronically, am I a candidate for an electronic audit?

Yes. If electronic data is available in any form, it may be used. Section 213.35, Florida Statutes, states:

Each person required by law to perform any act in the administration of any tax enumerated in s. 72.011 shall keep suitable books and records relating to that tax, such as invoices, bills of lading, and other pertinent records and papers, and shall preserve such books and records until expiration of the time within which the department may make an assessment with respect to that tax pursuant to s. 95.091(3).

Will my data be kept confidential?

The confidentiality of all taxpayer information, whether on paper or electronic medium, is ensured by s. 213.053, F.S. Any violation of confidentiality by any Department employee is a misdemeanor of the first degree.

Reference Material

Tax Law

Call Taxpayer Services to request a copy of s. 213.34, Florida Statutes, Authority to audit; s. 213.35, F.S., Books and records; and Rule 12-24.023, Florida Administrative Code, Recordkeeping Requirements - General. Tax laws are also available on the Department's Internet site. Tax laws are also available in the Florida Tax Law Library.

For Information and Forms

If you have questions about electronic auditing or stratified statistical sampling or would like to receive a booklet with additional information, contact your local service center or write to:

Applied Technology
Florida Department Of Revenue
5050 W Tennessee St
Tallahassee, Fl 32399-0100

Information and forms are available on our Internet site at www.myflorida.com/dor.

To speak with a Department of Revenue representative, call Taxpayer Services, Monday through Friday, 8 a.m. to 7 p.m., ET, at 800-352-3671.

Persons with hearing or speech impairments may call the TDD line at 800-367-8331 or 850-922-1115.

To receive forms by mail:

Order multiple copies of forms from our Internet site at www.myflorida.com/dor/forms or
Fax form requests to the DOR Distribution Center at 850-922-2208 or
Mail form requests to:

Distribution Center
Florida Department of Revenue
168A Blountstown Hwy
Tallahassee FL 32304-2702