Computer Assisted Audit Program
Introduction
Efficiency is of the highest importance in running a business. Time, money, and personnel are elements that no one can afford to waste. Technological advances, namely computer and software applications, have given both business and government the ability to be more efficient. If your business is selected for an audit, a program can reduce the time you spend compiling information.
The Missouri Department of Revenue, Field Compliance Bureau has developed a Computer Assisted Audit Program (CAAP). CAAP is an electronic tool for reviewing taxpayer data. Using the CAAP for a sales and use tax audit allows the Department of Revenue to review, analyze, and verify taxpayer data more efficiently and effectively.
Overview
Most companies maintain electronic accounting records. CAAP allows for the electronic submission of taxpayer data, reducing the voluminous amount of paper output for an audit.
CAAP is adaptable to a wide variety of output files and data types. This eases the process of transferring taxpayer data to the Department of Revenue and reduces the time and energy spent converting data into a usable format.
The use of CAAP greatly benefits both the taxpayer and the Department of Revenue by building an environment that uses technology to ensure efficient use of government and taxpayer resources.
CAAP Audit Process
The CAAP process does not change the traditional approach of the compliance audit, with the following minimal exceptions:
- Opening Conference
- For the opening conference, it is strongly encouraged that the taxpayer invite a representative of their information systems group that is familiar with the tax data files. In addition to the usual discussion of audit procedures, computer audit procedures and the data transfer process will also be discussed.
- Data Integrity Check
- This process verifies that the electronic data received by the Department of Revenue is both complete and accurate. This is done by reconciling monthly summaries and control totals from the electronic media, to the general ledger.
- Sample Methodology
- CAAP allows the Department of Revenue to use advanced sampling techniques while conducting audits. These sampling techniques provide an efficient and effective method of examining taxpayer records.
Benefits of a CAAP Audit
- Decreased Audit Time
- CAAP electronically reads taxpayer data, allowing electronic audits to be completed more efficiently than manual audits reducing the audit time at the business location. This minimizes the assignment of personnel by both the taxpayer and the Department of Revenue.
- Increased Reliability of Audit Sample Results
- CAAP sampling methods have proven to be more efficient in obtaining a reliable sample. With the records available in electronic format it reduces the risks associated with sampling and increases the accuracy of the audit.
Confidentiality Provisions:
- How can I be assured that my data will be used only for its intended purpose?
- Missouri law specifically prohibits taxpayer data from being used for purposes other that its intended use. Section 32.057 of the Revised Missouri Statutes makes it a class D felony for any current or former department of revenue employee to make known in any manner, to permit the inspection or use of, or to divulge to anyone, any information received in the conduct of an audit, except as specifically authorized by law. In addition to the aforementioned criminal penalties provided by law, the department has set policies regarding confidentiality. Violations of these policies can result in employee discipline up to and including termination.