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Sampling and Your AuditA properly designed sample can reduce the collective efforts of the taxpayer and the Department to complete the audit. Shorter audit times result in a cost savings to you. How Can Sampling Benefit My Audit?The nature of your records will determine the best audit plan for your business. The most accurate and unbiased audit is a detail audit, where each record in the audit period is examined to determine the actual amount of additional tax due or overpaid. A detail audit may be required by statute for some record types. Generally, the amount of time needed to complete a detail audit is exorbitant, unless the records are available electronically. An auditor typically selects a sample from the audit period and only examines the records in the sample. A properly designed sample can reduce the collective efforts of the taxpayer and the Department to complete the audit. Shorter audit times result in a cost savings to you. Although the emphasis of this brochure is on sales and use tax, the same sampling procedures may be used for audits of other taxes administered by the Florida Department of Revenue. What Is Sampling?Sampling is taking a segment of a much larger group or population and making inferences from the sample about the population. Randomly selecting the sample from the population removes bias from the sample selection process because each sample point has an equal chance of being selected. The objective of sampling is to provide an effective and efficient audit result in less time than a detail audit. The Department of Revenue uses two types of sampling: statistical and non-statistical. Statistical SamplingStatistical sampling uses random selection of sample points with precision or sampling risk calculated on the results. Precision measures how far off the sample results could be from the actual results. The statistical sampling methodology used by the Department is stratified statistical sampling. Stratified statistical sampling separates your data into similar groups, called strata, based on the dollar value of the amounts in the population. Stratified statistical sampling allows for calculation of sample precision at a 95% confidence level. In order to conduct a statistical sample, your transactions must be available in an electronic format and provided to the Department on electronic media. Your auditor can provide you with a list of supported media types. How Are Statistical Sample Points Selected?Statistical sample points are randomly selected from the electronic data. Records must be in good order and substantially complete for each transaction to have an equal chance (or probability) of being selected. The Department typically uses seven sample strata plus a detail stratum for any population. A detail threshold is identified and separated from the population to be sampled. The detail stratum contains the high dollar items in the population. Such items represent a large portion of total dollars and only a small percentage of total items. Non-Statistical SamplingWhen electronic transactions are not available or the electronic data is not suitable for an electronic detail or stratified statistical sampling, non-statistical sampling techniques will be used. Non-statistical sampling methods may use random selection of sample points, but do not calculate precision or sampling risk. In order to be a statistically valid sample, precision must be calculated. Because this is not generally possible when we do not have electronic records, these samples are referred to as non-statistical samples, even though random selection may have been used. How Are Non-Statistical Sample Points Selected?Non-statistical sampling points may be randomly or judgmentally selected. Sample points may be randomly selected for maximum efficiency and effectiveness based on how the records are physically stored and available. Typically, records are numbered or non-numbered, or may be a combination of both. Both types of records can be selected randomly for review by the auditor. Possible examples include: Numbered
The other non-statistical method of sample selection used is judgmental, where the auditor subjectively selects the sample points. It may be an applicable sample selection method when records are inadequate or other situations when random selection is not feasible. Frequently Asked QuestionsWhat if my records are filed differently from year to year?A representative sample can be selected from many different populations, based on how the records are filed. Your auditor can assist you with determining an effective and efficient audit plan for your individual records. What software will be used to randomly select the sample points?The Florida Department of Revenue has developed software programs that randomly select sample points from both electronic and hard copy populations. WinSample is the software supporting hard copy samples. It is available on the Department's web site at www.myflorida.com/dor. Will my records be kept confidential?Florida law specifically states that all tax information received by the Department is confidential and will only be used for official purposes. Any current or former Department employee who makes or participates in an unauthorized disclosure of confidential tax information is subject to criminal penalties provided in section. 213.053, Florida Statutes. Reference MaterialTax LawsCall 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. Look for the Florida Tax Law Library. For Information and FormsIf you have questions about sampling, 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 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:
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