1. A Tale of Two Audits Department of Revenue Audits Larry Clark, Clover Park Sabra Sand, Clark College

2. Audit Timeline for Clark College 8-5-14 DoR contacted Clark informing us we were selected for a ‘random’ audit 8-6-14 In person meeting with DoR Auditor 8-7-14 Auditor reviewed working papers for Sales and Use tax remits 8-20-14 Auditor emailed sampling items list 9-8-14 Auditor returned to review consumables items 9-9-14 Auditor emailed questions or exceptions 9-15-14 Auditor provided her final report

3. Initial Audit Meeting Scope – January 2011 thru June 2014, Retail Sales and Use Tax We can only easily provide data for the last 25 months Bookstore is on a separate system List of all consumables Showed her the list of sub-objects and she selected the following: EAEEEHESEYJAJBKA Ran Datax reports to pull all items charged to the above sub-objects for the previous 25 months We did not take out transfers, but I would consider it if we had to do it again We deleted all vendor ID’s as some may be SSN and we did not feel comfortable emailing those All equipment from our inventory database purchased within scope We also provided a datax for the same time period pulling all transactions to the sales tax accrual account Emailed all downloads in Excel format to the auditor Sales and Use tax remit Working Papers for the most recent 24 months of audit scope

4. Initial Audit Meeting, con’t Sales and Use tax remit Working Papers for the most recent 24 months of audit scope DoR Auditor wanted to review all revenue sources to determine taxability We shared the usual areas, bookstore, culinary, auto She wanted proof those were the only items We shared the GA1335 so she could review the accounts Items she questioned: Lab Printing Charges Library Book Replacement Account Vending Revenue

5. Auditor review of working papers Requested daily detail from Bookstore POS system to match sales tax for 6 random months Dates are off slightly since it is a separate system Had to determine correct dates to pull before providing the reports Only one minor concern for the bookstore Use of zip codes rather than address for tax rates on internet orders

6. Request for consumable backup Auditor emailed with her sampling request using the transaction detail I had previously emailed All capital assets purchased within the last 25 months (236 items) Items with purchase dollar amounts of $150 to $2,199 (150 items) Items with purchase dollar amounts of $2,200 to $19,999 (150 items) High dollar consumables, or over $20,000 (79 items) She wanted the paper backup pulled and numbered in her specific sequence She did not want to use our imaging program, luckily we do both still (paper and image)

7. Auditor Review of consumables The auditor returned to the college and spent an entire day going through the 4 boxes of checks and their backup She had compiled a list of items where sales tax wasn’t charged She wanted proof we paid use tax Directed her to the sales tax file we emailed her She returned to her office and used that file to determine use tax

8. Auditor Exceptions – preliminary Auditor emailed her exceptions allowing us to respond as to why sales or use tax was not paid (6 items) Invoice paid to SBCTC-IT for services Contacted Cheryl Bivens and provided backup to auditor Two invoices for online coursework access for students Provided auditor with RCW 82.12.02084 - Exemption for digital goods for use by students The remaining items were our error and simply missed so I acknowledged that

9. Final Report We had three exceptions listed in our final report 2 in 2013 1 in 2014 DoR policy is that there must be 3 or more in a year in order to project it across the population Ours did not meet that requirement Clark’s fine with interest was $936.00

10. What we learned Research all assertions the auditors have DoR Website RCWs Be careful about digital goods RCW only applies to student use Reseller’s Permit Provides exemption for items to be resold Need to ensure those items don’t get used for other purposes Our Auditor perferred paper, not images

11. Final Report – Clover Park Technical College Two auditors reviewed all purchases from FY13 over 5 partial days 83 exceptions were noted in our single year sample, which was imputed to the other three years. The total of our exceptions was $25,208 or an error ratio of 0.643334%. 34 -- automotive 27 -- catering bills 6 – were either credits or partial errors 6 – dental supplies 10 -- various Clover Park’s imputed penalty plus interest was $7,120 for the 4 years