promoting cooperation between audit and operations presenter: william p. cullen audit manager...

Promoting Promoting Cooperation Between Cooperation Between Audit and OperationsAudit and Operations

Presenter:Presenter:

William P. CullenWilliam P. Cullen

Audit ManagerAudit Manager

Arizona Department of Arizona Department of TransportationTransportation

Office of Audit and Analysis- Office of Audit and Analysis- Revenue AuditRevenue Audit

Level of Cooperation Level of Cooperation Between Audit and Between Audit and

OperationsOperations• Prior to July 2005Prior to July 2005

– Limited interaction with Limited interaction with Internal/External operationsInternal/External operations

– Assistance was usually on a case by Assistance was usually on a case by case basis, mostly problem Taxpayerscase basis, mostly problem Taxpayers

– Audit defined its role in a limited basis Audit defined its role in a limited basis “We do audits”“We do audits”

Level of Cooperation Level of Cooperation Between Audit and Between Audit and

Operations continued…Operations continued…• July 2005 to CurrentJuly 2005 to Current

– Extensive interaction with operations Extensive interaction with operations and related departments- usually and related departments- usually weeklyweekly

– Continuous projectsContinuous projects– Attend weekly meetings (if needed)Attend weekly meetings (if needed)– Quarterly and semi-annual status report Quarterly and semi-annual status report

to MVD Operations Managementto MVD Operations Management

Areas Subject to Interaction Areas Subject to Interaction and Interfacingand Interfacing

• InternalInternal– MVD ManagementMVD Management– Operations ManagementOperations Management– IFTA/IRP LicensingIFTA/IRP Licensing– Fleet ServicesFleet Services– AccountingAccounting– CollectionsCollections– Enforcement (Ports of Enforcement (Ports of

Entry)Entry)– Third PartyThird Party– Information Technology Information Technology

(IT)(IT)– Office of Inspector Office of Inspector

GeneralGeneral

• ExternalExternal– Office of the Attorney Office of the Attorney

GeneralGeneral– Department of RevenueDepartment of Revenue– County AttorneyCounty Attorney– Internal Revenue Internal Revenue

ServiceService– Department of Weights Department of Weights

and Measuresand Measures– Towns and CitiesTowns and Cities– Navajo NationNavajo Nation– Department of Public Department of Public

Safety (DPS)Safety (DPS)– Federal Highway Federal Highway

Administration (FHWA)Administration (FHWA)

Implementation of Refund Implementation of Refund Processing Program 1 of 4Processing Program 1 of 4

Refund:Refund:

Refers primarily to the refund of Refers primarily to the refund of state tax ($0.26) for consumption of state tax ($0.26) for consumption of use fuel used in a non-taxable use fuel used in a non-taxable application, i.e. off highway miles, application, i.e. off highway miles, reefer gallons, etc.reefer gallons, etc.


Problem:Problem:

The Attorney General’s office The Attorney General’s office conducted an audit of the Refund conducted an audit of the Refund Department. Recommendations Department. Recommendations included involvement of Audit included involvement of Audit Department to improve internal Department to improve internal controls and procedures for controls and procedures for processing of refunds.processing of refunds.


Solution:Solution:• Create a Refund Team consisting of Create a Refund Team consisting of

Refund, Operations, and Audit team Refund, Operations, and Audit team membersmembers

• Met 2-4 hours per week for 2 years. Met 2-4 hours per week for 2 years. Consolidated refund forms.Consolidated refund forms.

• Developed refund processing Developed refund processing procedures and policiesprocedures and policies

• Refunds over a specified amount Refunds over a specified amount need need secondary (audit) approvalsecondary (audit) approval


Result:Result:• Department and Division efficiency Department and Division efficiency

and productivity was improvedand productivity was improved• Customer service was enhancedCustomer service was enhanced• Frivolous and duplicate refunds were Frivolous and duplicate refunds were

eliminatedeliminated• Customer database was establishedCustomer database was established• Resulted in a 4 hour internal training Resulted in a 4 hour internal training

session for auditorssession for auditors• A Win-Win situationA Win-Win situation

Sanitizing the IFTA/IRP Sanitizing the IFTA/IRP Renewal Database 1 of 3Renewal Database 1 of 3

Problem:Problem:

Many IFTA registrants were Many IFTA registrants were automatically renewed, although automatically renewed, although some of them were non-compliant.some of them were non-compliant.


Solution:Solution:• Create an ongoing system to ensure a Create an ongoing system to ensure a

compliant registration processcompliant registration process• A Motor Carrier Process Team was formed A Motor Carrier Process Team was formed

which included Operations, Audit, and ITwhich included Operations, Audit, and IT• A preliminary letter was sent to Taxpayers A preliminary letter was sent to Taxpayers

who had a missing report, only traveling who had a missing report, only traveling intrastate, or did not file any activityintrastate, or did not file any activity

• A second letter with action by a bonding A second letter with action by a bonding deadline was sent- If not complied with, deadline was sent- If not complied with, result could be revocationresult could be revocation


Result:Result:• Hundreds of (Non-compliant) Licensees Hundreds of (Non-compliant) Licensees

have been removed from active account have been removed from active account statusstatus

• Audits required are based on number of Audits required are based on number of active renewed registrants. active renewed registrants.

500 removed accounts = 15 IFTA Audits500 removed accounts = 15 IFTA Audits

15 entities = One Auditor15 entities = One Auditor

Implementation of Record Implementation of Record Keeping Agreement 1 of 3Keeping Agreement 1 of 3

Problem:Problem:

Many Taxpayers do not meet the Many Taxpayers do not meet the minimum record keeping minimum record keeping requirements and some Taxpayers requirements and some Taxpayers do not keep records for the required do not keep records for the required four (4) year retention period.four (4) year retention period.


Solution:Solution:

Educate the Taxpayers by having Educate the Taxpayers by having them sign a Record Keeping them sign a Record Keeping Agreement which identifies all Agreement which identifies all records to be maintained and the records to be maintained and the time period for keeping all the time period for keeping all the records.records.


Results:Results:• A partial mailing was sent in July 2008 with A partial mailing was sent in July 2008 with

the remainder to be mailed to all IFTA/IRP the remainder to be mailed to all IFTA/IRP registrants in September 2008. Early registrants in September 2008. Early indications are very positive. Follow up indications are very positive. Follow up training at several levels will be required. Full training at several levels will be required. Full impact of the project will take 3 years.impact of the project will take 3 years.

• Should enhance the revenue being reported Should enhance the revenue being reported from IFTA tax reports and annual IRP from IFTA tax reports and annual IRP applications.applications.

• The improved record keeping will dramatically The improved record keeping will dramatically reduce the number of hours required to reduce the number of hours required to conduct IFTA and IRP audits.conduct IFTA and IRP audits.

Making it HappenMaking it HappenPromoting Cooperation Between Promoting Cooperation Between

Departments and AgenciesDepartments and Agencies• Not one solution, situations are uniqueNot one solution, situations are unique• Have patience, change will not happen Have patience, change will not happen

overnightovernight• Empathy- Try to look at things through their Empathy- Try to look at things through their

eyeseyes• Look at the Big Picture, all the ramificationsLook at the Big Picture, all the ramifications• Be responsive to requests and suggestionsBe responsive to requests and suggestions• Use a Transparent ApproachUse a Transparent Approach• Get to know the Players inside and outside of Get to know the Players inside and outside of

work environmentwork environment• Invite to meetingsInvite to meetings• Have lunchHave lunch• Attend conference togetherAttend conference together• Share credit- send a thank you e-mailShare credit- send a thank you e-mail

BenefitsBenefits

• Both department enjoy productivity Both department enjoy productivity gainsgains

• More relaxed atmosphereMore relaxed atmosphere• Audit referrals from many Audit referrals from many

departmentsdepartments• Career opportunitiesCareer opportunities• Much more informed- holistic Much more informed- holistic

knowledgeknowledge

promoting cooperation between audit and operations presenter: william p. cullen audit manager...

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