Program Compliance Review Committee Proposed Review Guide Changes

Let’s Review Issues with Current Process Process is very time consuming for jurisdictions to retrieve and post the requested audit and licensee account files. The Review Team spends a considerable amount of time completing the review of all items and filling in the worksheets. Review covers a five year period and issues in the early years may have been addressed prior to the end of the review period.

Recommended Changes The Review Team will only be reviewing compliance with the provisions contained in R1555. Conduct the reviews on a bi-annual basis, except for audit accountability. This allows for review of more current data and timely corrections of compliance issues.

Recommended Changes Extensive use of Clearinghouse data to conduct reviews. This will save considerable time for jurisdictions being reviewed. Limit the sampling of audits and carrier accounts to test financial compliance. Audit coverage to be reviewed and reported on 5 year cycles.

Audit Coverage 5 Year Cycle ***Based on feedback and concerns with transition to originally proposed 5 year cycles: The 5 year cycles to review A250 (3%) and A260 (High / Low) will remain consistent. The only change is the PCRC will determine compliance. The committee will monitor progress and provide periodical reports.

Audit Coverage 5 Year Cycle Recommend Audit Accountability - Follow-up by the PCRC Year 2 Letter sent to the jurisdictions following the Annual Report Due Date (March 1) Year 3 Letter sent to the jurisdictions following the Annual Report Due Date (March 1) Year 4 Letter sent to the jurisdictions following the Annual Report Due Date (March 1) Year 5 Letter sent to the jurisdictions following the Annual Report Due Date (March 1) Year 6 Compliance citing if A250/A260 are not met

Why the Changes? Making the Audit Accountability review the responsibility of the PCRC will allow for quicker action if non-compliance is noted. Jurisdictions can be contacted as soon as annual reports are filed. To make this happen: Request jurisdictions post their number of High / Low distance audits to annual report. If not, reports will have to be created and sent to PCRC annually.

Two Year Review Cycle Jurisdictions will be split up into two year cycles. 29 every other year The first two years will be the transition period.

Why the Changes? The Two Year cycle will provide a more timely picture of the financial operations of a jurisdiction. Over 90% of the new two year review cycle can be completed using only the Clearinghouse: Tax returns can be examined for timeliness, interest calculations, all returns were filed. Audit results can be verified in Clearinghouse to determine timeliness, interest calculation, and payments.

Why the Changes? By using the Clearinghouse to complete as much of the review as possible, the Review Team will not need to have all the audits and licensee files uploaded. Interjurisdictional Audit Reports required to have much more details starting in 2017. Most jurisdictions now have a significant amount of returns filed electronically. Requests could be made to clarify discrepancies noted.

What Hasn’t Changed? Any final determination of non-compliance by the PCRC must still be sent to membership for a vote and membership will determine referring non-compliance issues to the Dispute Resolution Committee. Licensees and all affected jurisdictions will still have appeal rights towards audit results. Jurisdictions are still required to comply will all aspects of IFTA. New member jurisdictions will still have complete review.

Question time! Please submit your questions.

What Happens Next? The PCRC requests that comments, questions, and suggestion be sent in to Debbie Meise. dmeise@iftach.org All items received by Debbie will be considered and included as needed into the final draft at the Annual Business Meeting (ABM). A request for vote is planned to be made at the ABM. If a Majority of the voting members approve this review guide, implementation will occur January 1, 2018.

See you at the Annual Business Meeting in Indianapolis! Thank You! See you at the Annual Business Meeting in Indianapolis!