Focused Assessment Program

Exhibit 6A Appendix I

Sampling Steps
I. PLAN THE SAMPLE A. Decide whether or not to sample. (Applies to all circumstances.) 1. Define the audit objective. a) he audit objective usua!!" comes direct!" from the audit program or is a variation that has been modified b" the auditor to fit the specific circumstances. If there is no standard audit program# the auditor must define an audit objective appropriate for the uni$ue audit.

b) %onsider a!! &no'!edge avai!ab!e to date. A!! avai!ab!e information about the compan" and its %ustoms transactions shou!d be considered in p!anning the audit and an" re$uired samp!ing. his information ma" come from prior audits# historica! fi!es# profi!es# $uestionnaires# ris& assessment# surve" resu!ts# input from other %ustoms discip!ines# etc. his information 'i!! he!p in refining the audit objective and the audit tests re$uired to achieve that objective. c) (nce the audit objective is defined# audit testing can be designed to achieve that objective. he appropriate audit testing 'i!! var" depending on the audit objective. ). Identif" the avai!ab!e data# records# and supporting documents. a) he avai!ab!e information# its method of storage and retrieva!# and its format 'i!! direct!" impact the audit tests that can and shou!d be app!ied.

b) For examp!e# if no e!ectronic fi!es are avai!ab!e# this 'ou!d severe!" !imit the macro ana!"sis that cou!d be performed and 'ou!d restrict the samp!ing options as 'e!!. *. Determine if macro ana!"sis is possib!e and 'i!! achieve the audit objective. a) +acro ana!"sis is an" high,!eve! ana!"sis not invo!ving the revie' of individua! items or transactions. +acro ana!"sis ma" inc!ude such procedures as considering tota! va!ue ba!ances or tota! dut" paid# ca!cu!ating potentia! va!ue or dut" impact# extracting and-or comparing data and tota!s from %ustoms and importer s"stems# ana!".ing variances# ana!".ing specific characteristics of extracted data# and ana!".ing re!evant data trends.

1 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

b) +acro ana!"sis is a &e" part of assessing ris& exposure but ma" a!so be used an"time it 'i!! he!p satisf" the audit objectives. It can be more efficient and more precise than samp!ing and therefore# shou!d be considered first. If macro ana!"sis 'i!! achieve the audit objective# then there is no need to perform the remaining samp!ing steps herein. horough!" document a!! aspects of the macro ana!"sis performed in comp!iance 'ith audit documentation po!icies. c) +icro testing# on the other hand# is the revie' of individua! items or transactions 0samp!ing) usua!!" in order to ma&e conc!usions about the popu!ation or universe from 'hich the" are dra'n. he remaining steps pertain to such micro testing or samp!ing. B. If macro anal sis is not s!fficient to achie"e the a!dit o#$ecti"e% decide on nonstatistical &$!dgmental' or statistical sampling. (Applies to nonstatistical and statistical sampling.) 1. Define the samp!ing objective. he specific samp!ing objective 0i.e.# the reason to samp!e# the $uestion "ou1re tr"ing to ans'er about the universe# 'hat "ou1re tr"ing to test-measure# the audit statement "ou need to ma&e# etc.) 'i!! he!p determine 'hether nonstatistica! or statistica! samp!ing is appropriate. ). 2onstatistica! samp!ing re!ies on auditor judgment to se!ect the samp!e items and eva!uate the samp!e resu!ts 0except in the case of 1//3 revie' 'here actua! resu!ts are &no'n). 4tatistica! samp!ing is an objective process for random!" se!ecting the samp!e items and statistica!!" eva!uating the samp!e resu!ts. *. here are specific !imited circumstances in 'hich nonstatistica! samp!ing is appropriate. 2onstatistica! samp!ing is suitab!e if statistica! resu!ts are not needed# there is a high degree of certaint" that a conc!usion can be dra'n 'ithout further samp!ing# and a) the purpose is to ta&e a surve" in order to determine the necessit" for and extent of substantive tests# and-or. b) there is a desire to concentrate audit effort in specific prob!em area revea!ed b" a previous samp!e or other source of information# and-or c) the universe is ver" sma!! and it 'ou!d be $uic&er and easier to revie' a!! or most of the items in the universe# and-or d) the area is ver" sensitive and there is no room for error or exact resu!ts are needed so a!! of the items in the universe 'i!! be revie'ed.

) December )//)

Focused Assessment Program

Exhibit 6A Appendix I

5. It is important to consider the first part of the re$uirement for nonstatistica! samp!ing 0i.e. statistica! resu!ts are not needed and there is a high degree of certaint" that a conc!usion can be dra'n 'ithout further samp!ing) because it is genera!!" not appropriate to ca!cu!ate comp!iance rates or to project do!!ar impacts 0va!ue or revenue) based on resu!ts of sma!! nonstatistica! samp!es. %omp!iance rates and do!!ar impacts cou!d be based on resu!ts of 1//3 revie's because the" represent actua! resu!ts. 6. If statistica! resu!ts are needed or "ou need more than a nonstatistica! samp!e to ma&e a conc!usion 0e.g.# objective resu!ts# projections to the universe 'ith measurab!e precision# or comp!iance rates)# then nonstatistica! samp!ing is not appropriate 0un!ess 1//3 revie' is possib!e). 6. If nonstatistica! samp!ing is chosen# s&ip to samp!ing step I.D. If statistica! samp!ing is chosen# continue 'ith samp!ing step I.%. be!o'. (. If nonstatistical sampling will not satisf the sampling o#$ecti"e% decide on which t pe of statistical sampling &attri#!te disco"er or "aria#le sampling' is appropriate. (Applies to statistical sampling.) 1. Attribute discover" samp!ing is a specia! &ind of attribute acceptance samp!ing 'here the occurrence of even a sing!e error constitutes a fai!ure of the universe. 7ariab!e samp!ing is a form of substantive testing that is $uantitative in nature and can be used to determine variance amounts or do!!ar impacts 0e.g.# materia!it",based comp!iance rates# revenue due# etc.). ). Attribute discover" samp!ing is appropriate 'hen the area of revie' is sensitive and an" s"stemic error 'ou!d constitute noncomp!iance 0and potentia!!" fraud). his ma&es it appropriate for the revie' of transshipment or undec!ared ADD-%7D. Attribute discover" samp!ing is a!so appropriate 'hen no error is expected or errors resu!t in pena!ties rather than revenue due 0such as bro&er or bonded 'arehouse audits). *. 7ariab!e samp!ing shou!d be used in a!! other circumstances 'here statistica! samp!ing is appropriate. 7ariab!e samp!ing ma" be ph"sica! unit samp!ing 0'here individua! items or ph"sica! units are se!ected) or do!!ar unit samp!ing 0'here individua! do!!ars are se!ected). D. Select the sampling frame and !nit. (Applies to nonstatistical and statistical sampling.) 1. Identif" avai!ab!e frames# their samp!ing units# and formats 0i.e.# e!ectronic# hard cop" printout# or ph"sica! items).

* December )//)

Focused Assessment Program

Exhibit 6A Appendix I

a) 8hether nonstatistica! or statistica! samp!ing is used# potentia! samp!ing frames and samp!ing units must be identified. A samp!ing frame is the ph"sica! or e!ectronic representation of the universe from 'hich the samp!e is se!ected. he universe is the entire group of items comprising the categor" or area of interest to the auditor 0to be tested). he samp!ing units are the individua! units 0e.g.# items# transactions# !ines# do!!ars# ph"sica! fi!es# etc.) that are se!ected for revie'. b) he avai!ab!e frames and units must be eva!uated to determine 'hich 'i!! best satisf" the audit and samp!ing objectives and the best samp!ing approach to ta&e. An e!ectronic frame is a!'a"s superior to an identica! ph"sica! frame or !isting because it provides more f!exibi!it" and efficienc" in the areas of frame ana!"sis# samp!e se!ection# and samp!e resu!ts eva!uation.

). %onsider the !eve! of summari.ation of the frame and units and identif" the avai!ab!e supporting records-documents and their !eve! of summari.ation. a) Frames# units and supporting records and documentation can be at various !eve!s of summari.ation. he" ma" be at a ver" high !eve! or a ver" !o' !eve!. For examp!e# an entr" is made up of man" entr"-tariff !ines# 'hich ma" be made up of man" invoices# 'hich ma" be made up of man" invoice !ines# 'hich ma" be made up of man" parts-artic!es# 'hich ma" be made up of man" st"!es# 'hich ma" be made up of man" si.es and co!ors. Importer records and documents ma" group information simi!ar!" or b" man" other groupings such as b" !ot# container# purchase order# date received# batch processed# month# supp!ier# merchandise categor"# etc. b) (ften# the higher the !eve! of samp!ing# the more difficu!t the revie' because the more items and supporting documents that have to be revie'ed. 9ut this is not a!'a"s the case. It depends on the samp!e items 0nature# !eve! of summari.ation and number) and the avai!ab!e supporting records and documentation 0ph"sica! or e!ectronic# !eve! of summari.ation# and effort re$uired to trace and verif" the samp!e items). c) he idea! situation is one in 'hich the supporting records and documents are summari.ed at the same !eve! as the samp!e items or one in 'hich the samp!e items are easi!" traced through and verified b" the supporting records and documents. Prob!ems occur or significant extra effort ma" be re$uired 'hen this is not the case 0i.e.# the samp!e items and supporting records and documents are at ver" different !eve!s and-or the samp!e items are not easi!" traced-verified).

5 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

d) A!so &eep in mind the audit and samp!ing objectives , 'hat is being tested. If the entered-reported data is being tested# then it 'ou!d not be effective or efficient to samp!e and verif" at a much !o'er !eve! than that 'hich is reported 0e.g.# samp!ing at a !eve! of merchandise co!or 'hen a!! co!ors are proper!" combined on an entr" !ine for reporting c!assification# $uantit"# and va!ue). *. 9ased on the avai!ab!e choices# se!ect the best frame and unit to effective!" and efficient!" accomp!ish the audit and samp!ing objectives. a) As&: ;If I se!ect this frame and samp!ing unit# 'hat am I rea!!" testing and 'hat procedures 'i!! I have to perform< 8hat and ho' man" records and documents 'i!! I have to revie'< 8hat difficu!ties 'i!! I have tracing the samp!e items through the records and documents< 8hat manua! or e!ectronic ca!cu!ations or summari.ation 'i!! I have to perform in order to trace and verif" the samp!e items< 8i!! this satisf" the audit and samp!ing objective< Is there a better 0more efficient or effective) frame or samp!ing unit< b) An e!ectronic fi!e genera!!" 'or&s best 'ith an" &ind of nonstatistica! or statistica! samp!ing. If an e!ectronic fi!e is not avai!ab!e# a printout-!isting or a ph"sica! item frame can be used for nonstatistica! and variab!e ph"sica! unit samp!ing. A sma!! printout or !isting that cou!d easi!" be t"ped into E=,>uant cou!d be used for variab!e do!!ar unit samp!ing. c) If nonstatistica! samp!ing is being used# s&ip to samp!ing step I.?. If statistica! samp!ing is being used# continue 'ith samp!ing step I.E. be!o'. E. )alidate the frame. (Applies to statistical sampling.) 1. he purpose of frame va!idation is to determine if it is an ade$uate representation of the universe intended for testing a) @emove credit-negative items and .ero ba!ance items from the frame. Proper samp!ing re$uires that dup!icate items 0e.g.# credit-negative items 'ith corresponding debit-positive items) and .ero va!ue items that have more than one chance or no chance of se!ection be removed from the frame A either for separate revie' 0separate samp!e or 1//3 revie') or for no revie'. b) %ompare-reconci!e the chosen frame 'ith the intended universe or another potentia! frame to tr" to verif" that it is a comp!ete and accurate !isting suitab!e for the intended objective.

6 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

For examp!e# if the intended universe is a!! B4P parts received and a frame extracted from an importer parts database is chosen# this frame cou!d be compared to B4P reported to %ustoms in A%4. (r if the intended universe is a!! imported va!ue and c!assifications and a frame of A%4 entries is chosen# this frame cou!d be compared to the inventor" receipts 0a!! imports) for the "ear. ). he primar" purpose of these t"pes of comparisons is to ensure that "ou have good data from 'hich to samp!e. ?o'ever# as a form of macro ana!"sis# these reconci!iations cou!d a!so revea! additiona! ris& areas or potentia! prob!ems# such as potentia! unreported va!ue# misc!assified merchandise# over,dec!arations of B4P# under,dec!arations of ADD-%7D# etc.

*. Ana!".e an" variances and adjust the frame# accept the frame# or reject the frame and se!ect another as appropriate. a) here are man" things that might cause a variance bet'een the frame and universe 0or t'o frames representing the same information). 4ome common causes of variances are as fo!!o's: 01)
iming or time frame differences. here are various dates in %ustoms A%4 s"stem 0create date# entr" date# export date) 'hich are usua!!" different from the dates in the Importer1s s"stem 0received date# order date# paid date). herefore# there cou!d be some timing differences 'hen tr"ing to compare A%4 data 'ith importer data. Exc!uded items. Due to the comp!exities of data and data s"stems and the potentia! for miscommunication# it is common for 'ho!e categories of data to be exc!uded from one frame or another. his might be data associated 'ith a particu!ar countr"# vendor# division# importer ID# or bro&er. (r it might be data assumed to be uni$ue# dissimi!ar# or irre!evant such as samp!es# merchandise purchased for use rather than resa!e# returns# merchandise in transit# drop shipments# consignments# or informa! entries. Prob!ems 'ith the data source or EDP s"stem. 4ometimes data is incomp!ete because on!" one partia!!" comp!ete source 'as accessed 'hen the rest of the data is contained in another fi!e# database# or s"stem.

0))

0*)

b) 7arious methods can be emp!o"ed to identif" the cause of a variance. >uestioning about merchandise receipt timing 'i!! he!p to identif" and adjust for timing variances. %omputer ana!"ses 0such as summing and comparing tota!s b" countr"# +ID and vendor# tariff and merchandise descriptions) ma" he!p identif" missing categories of data. Brouping $ueries ma" sho' that dup!icate records are present.

6 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

c) (nce the cause has been determined# a decision must be made if the frame can and shou!d be corrected or adjusted# accepted as is# or rejected and another frame used instead. he &e" 'i!! be the audit and samp!ing objective 0the intended universe and testing) and 'hether adjustments are actua!!" viab!e. 5. If attribute discover" samp!ing is being used# s&ip to samp!ing step I.?. If variab!e samp!ing is being used# continue 'ith samp!ing step I. F. be!o'. *. Anal +e the frame "aria#ilit and anticipated,potential errors. (Applies to statistical variable sampling.) 1. Frame variabi!it" refers to the differences and simi!arities among samp!ing units 'ithin the frame# in terms of do!!ar amounts and characteristics. ). he degree of frame variabi!it" 'i!! he!p determine the re$uired samp!e si.e and the best samp!ing approach. a) Determine the s&e'ness b" ca!cu!ating the measures of centra! tendenc". 01)
%a!cu!ating the mean# median# and mode 0A7E@ABE# +EDIA2# and +(DE functions in +icrosoft Exce!) 'i!! indicate the s&e'ness of the frame. If the mean is greater than the median# then the frame is right s&e'ed# meaning that there are a fe' high do!!ar items and man" !o' do!!ar items. If the mean is !ess than the median# then the frame is !eft s&e'ed# meaning there are a fe' !o' do!!ar items and man" !arge do!!ar items. he greater the difference bet'een the mean and median# the greater the s&e'ness. 4&e'ness is an indication of do!!ar variabi!it" and ma" a!so point to the need for hori.onta! stratification 0b" do!!ar amount). A high!" s&e'ed universe 0!eft or right) 'ou!d point to'ards a !arger stratified ph"sica! unit samp!ing. A high!" !eft s&e'ed universe 'ou!d point to'ards a !arger do!!ar unit samp!ing.

0))

b) Determine the do!!ar variabi!it" b" ca!cu!ating the indices of dispersion 0standard deviation and coefficient of variation). 01)
4tandard deviation is the average distance of individua! va!ues or the extent to 'hich individua! va!ues depart from the average. In +icrosoft Exce!# it can be ca!cu!ated b" using the 4 DE7P function. he !arger the standard deviation# the more variation. 0Do not use an" other 4 D functions in +icrosoft Exce! as 'i!! resu!t in a different# incorrect resu!t.) he coefficient of variation 0%7) is the standard deviation expressed as a percentage. he formu!a is 4tandard Deviation of the frame -

0))

C December )//)

Focused Assessment Program

Exhibit 6A Appendix I

+ean of the frame D 1//. he higher the %7# the more do!!ar variation in the frame. Benera!!"# a %7 E 6/3 indicates !o' variation# a %7 bet'een 6/3 and 1//3 indicates moderate to high variation# and a %7 over 1//3 indicates ver" high variation.

0*)

A higher %7 0F6/3) 'ou!d point to'ards a !arger stratified ph"sica! unit samp!e or a !arger do!!ar unit samp!e.

c) Determine if there are obvious do!!ar brea&s or groupings 0for hori.onta! stratification). 0App!ies if the universe is high!" s&e'ed and-or the %7 F 6/3.) 01)
?igh s&e'ness# standard deviation# and %7 indicate high do!!ar variation and probab!" a need to stratif" A at !east hori.onta!!" 0on do!!ars) and possib!" vertica!!" 0on characteristics). 4orting the frame in +icrosoft Exce! 0b" do!!ar amount) ma" revea! c!ear divisions or groupings of simi!ar do!!ar amounts. 0 his t"pe of ana!"sis ma" a!so be performed b" creating various tab!es and reports in +icrosoft Access.) (bvious do!!ar brea&s or groupings 'ou!d point to'ards a !arger manua!!" stratified ph"sica! unit samp!e. It cou!d a!so point to'ards a do!!ar unit samp!e 'ith a 1//3 revie' high do!!ar stratum if the obvious do!!ar brea& is bet'een high do!!ars and the rest of the frame.

0))

d) Ana!".e the characteristics to determine if !ogica! groupings exist 0for vertica! stratification). 01)
Ana!".ing the frame in +icrosoft Exce! 0sorting# subtota!ing# creating pivot tab!es# etc.) b" description# part number# ? 4 or tariff number# account number# product !ines# si.e# $uantit" or an" other re!evant characteristic ma" revea! common characteristics or categories that shou!d be grouped together. 0 his t"pe of ana!"sis ma" a!so be performed b" creating various tab!es and reports in +icrosoft Access.) A high!" variab!e frame in terms of characteristics 'ou!d point to'ards a !arger stratified ph"sica! unit samp!e or mu!tip!e do!!ar unit samp!es.

0))

e) Identif" specia!# ver" !o' ris&# or ver" high ris& items and decide 'hether to !eave them in the frame for random samp!ing or remove them from the frame for no revie' or 1//3 revie'. 01) 0))
hese ma" be# for examp!e# ver" !o' do!!ar items# ver" high do!!ar items# informa! entries# consignee entries# etc. 7er" !o' do!!ar items ma" be e!iminated from the frame IF the team agrees that there are no potentia! significant issues or errors that G December )//)

Focused Assessment Program

Exhibit 6A Appendix I

cou!d occur. 9e cautious about automatica!!" assuming that !o' do!!ar items are insignificant. It ma" not be appropriate to exc!ude the !o' do!!ars if:

0a)

the frame contains c!usters 0the apparent!" !o' do!!ar items ma" not be !o' in comparison to the individua! items ma&ing up the c!usters)# the" are significant in the aggregate# the" represent sensitive specia! trade areas# or the va!ue is &no'n or suspected to be significant!" understated.

0b) 0c) 0d) 0*)

For examp!e# one compan" had approximate!" H*6/#/// in !o' do!!ar samp!e merchandise out of H66 mi!!ion tota! reported va!ue. hese 'ere !eft in the frame and some 'ere chosen in the samp!e. During the attempt to support the samp!e merchandise va!ue# the importer discovered the" 'ere significant!" underva!ued and submitted a disc!osure for approximate!" H1.6 mi!!ion 'ith revenue due of about H*//#///. If these !o' do!!ar items had been de!eted from the frame for no revie'# the errors 'ou!d not have been discovered and this !oss of revenue 'ou!d not have been recovered.

*. Define the anticipated or potentia! errors. a) he fre$uenc"# t"pes# and amounts of the anticipated or potentia! errors 'i!! he!p to determine the best samp!ing methodo!og" for the situation.

b) Fre$uent errors# inc!uding sma!! errors# 'ou!d point to'ards ph"sica! unit samp!ing. Infre$uent !arge errors 'ou!d point to'ards do!!ar unit samp!ing. -. Determine the #est "aria#le sampling method &ph sical !nit or dollar !nit' #ased on the res!lts of the frame anal sis. (Applies to statistical variable sampling.) 1. Ph"sica! unit samp!ing genera!!" 'or&s best 'ith: a) An e!ectronic frame# a printout or !isting frame# or a ph"sica! item frame. b) An" amount of frame variabi!it"# inc!uding one that is high!" variab!e in terms of do!!ars and characteristics. c) 4amp!ing units that are individua! items or samp!ing units that are c!usters of items 'here revie'ing the entire c!uster is acceptab!e

I December )//)

Focused Assessment Program

Exhibit 6A Appendix I

0i.e.# the c!usters consist of a fe' items and-or revie'ing 'ho!e c!usters 'ou!d not re$uire significant additiona! effort to trace through the supporting records and documents). d) he anticipated or potentia! errors are fre$uent# inc!uding sma!! errors.

). Do!!ar unit samp!ing genera!!" 'or&s best 'ith: a) An e!ectronic frame or a sma!! printout or !isting frame that cou!d be t"ped into E=,>uant. b) A frame that is not high!" variab!e or a frame that is high!" variab!e in terms of do!!ars 0especia!!" !eft s&e'ed) but not in terms of characteristics. 0Do!!ar unit samp!ing ma" be used 'ith a frame that is high!" variab!e in terms of characteristics# but it 'ou!d re$uire mu!tip!e do!!ar unit samp!es.) c) 4amp!ing units that are c!usters of items 'here revie'ing the entire c!uster is not acceptab!e 0i.e.# revie'ing entire c!usters 'ou!d re$uire significant additiona! effort to trace through the supporting records and documents). d) he anticipated or potentia! errors are infre$uent !arge errors.

H. Esta#lish appropriate sample,strata si+es and sampling parameters. (Applies to nonstatistical and statistical sampling.) 1. 2onstatistica! 0judgmenta!) samp!es. a) 4amp!e si.es for nonstatistica! samp!es 'i!! depend on the t"pe of audit# audit objective# and samp!e objective. b) For Focused Assessment 0FA) Pre,Assessment 4urve" 0PA4)# samp!e si.es 'i!! be 1 to )/ depending on the resu!ts of the initia! ris& exposure and interna! contro! assessment as fo!!o's: 01) 0)) 0*) 05)
Jo' ris& exposure and strong interna! contro!s K !o' end of 1 to 1/ range. Jo' ris& exposure and ade$uate interna! contro!s K midd!e of 1 to 1/ range. Jo' ris& exposure and 'ea& interna! contro!s K high end of 1 to 1/ range. +oderate ris& exposure and strong interna! contro!s K !o' end of 6 to 16 range.

1/ December )//)

Focused Assessment Program

Exhibit 6A Appendix I

06) 06) 0C) 0G) 0I)

+oderate ris& exposure and ade$uate interna! contro!s K midd!e of 6 to 16 range. +oderate ris& exposure and 'ea& interna! contro!s K high end of 6 to 16 range. ?igh ris& exposure and strong interna! contro!s K !o' end of 1/ to )/ range. ?igh ris& exposure and ade$uate interna! contro!s K midd!e of 1/ to )/ range. ?igh ris& exposure and 'ea& interna! contro!s K high end of 1/ to )/ range.

c) For most other audits# nonstatistica! samp!e si.es 'i!! genera!!" be 1//3 of the revie' area. If the revie' area is much !arger than a norma! statistica! samp!e si.e 06/ to 1//)# then statistica! samp!ing shou!d be considered instead of nonstatistica! samp!ing. ). Attribute discover" samp!es. a) 4amp!e si.es for attribute discover" samp!es are determined b" running E=,>uant A DI4% 0D(4 7ersion *.1/) or Attribute 4amp!e 4i.e Determination Procedure 08indo's 7ersion 1./.1). he procedure 'i!! genera!!" resu!t in samp!e si.es 'ithin the range of 6I to I/# depending on the frame si.e and specified samp!ing parameters of critica! error rate and government ris&. he critica! error rate is the maximum acceptab!e error rate in the universe. he government ris& is the to!erab!e !eve! of ris& of accepting a fau!t" universe 0one 'ith an actua! error rate exceeding the critica! error rate). 01)
For circumstances 'here an" s"stemic error resu!ts in noncomp!iance 0e.g. FA Assessment %omp!iance esting or Fo!!o', up of transshipment or undec!ared ADD-%7D)# the appropriate parameters to use are 63 critica! error rate and 13 government ris&. For those instances 'hen no errors are anticipated or errors resu!t in pena!ties rather than revenue due 0e.g.# bro&er or bonded 'arehouse audits)# the appropriate parameters to use are 63 critica! error rate and 63 government ris&.

0))

b) A!though the purpose of an attribute discover" samp!e is to determine if an" error exists rather than estimate do!!ar impacts# there cou!d be situations in 'hich estimating do!!ar impacts based on the samp!e resu!ts is appropriate or necessar". A desired precision percentage under 1//3 and confidence !eve! of I63 0same as for

11 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

variab!e samp!ing) shou!d be estab!ished for just such a possibi!it". he desired precision percentage shou!d be based on auditor judgment of 'hat 'ou!d be acceptab!e for the situation. he achieved precision percentage 'i!! be compared to the desired precision percentage 'hen determining the acceptabi!it" of the projection. *. 7ariab!e samp!es. a) 7ariab!e samp!e si.es depend on the variabi!it" in the samp!ing frame. he more variabi!it" in the frame 0do!!ars and characteristics)# the !arger the samp!e si.e re$uired to achieve acceptab!e samp!e resu!ts. +inimum samp!e si.e guide!ines 0based on statistica! princip!es) have been estab!ished to assist auditors in determining appropriate variab!e samp!e si.es. 01)
Ph"sica! unit samp!es.

0a)

If the frame is homogenous# then the minimum samp!e re$uired is 1 samp!e 'ith 1 stratum of 6/ items. A homogenous frame is one 'ith !o' variabi!it" in do!!ars and characteristics 0i.e. simi!ar do!!ars and characteristics). Indicators of !o' do!!ar variabi!it" are !o' s&e'ness# !o' standard deviation# !o' %7 0E 6/3) and no obvious do!!ar brea&s or groupings. Jo' characteristic variabi!it" 'ou!d be a frame 'ith no obvious groupings b" characteristics. If the frame is nonhomogenous# then the minimum samp!e re$uired is 1 samp!e of * random strata p!us 1 high do!!ar 1//3 revie' stratum. A nonhomogenous frame is one 'ith high variabi!it" in do!!ars and characteristics 0i.e. dissimi!ar do!!ars and characteristics). Indicators of high do!!ar variabi!it" are high s&e'ness# high standard deviation# high %7 0F 6/3) and obvious do!!ar brea&s or groupings. ?igh characteristic variabi!it" 'ou!d be a frame 'ith obvious groupings b" characteristics. he tota! samp!e si.e shou!d be at !east 1// items. Each random stratum shou!d be at !east */ items# except 'hen */ items 'ou!d be more than 63 of the items in the entire stratum. In that case# the stratum si.e can be 63 or 16 items# 'hichever is greater. Benera!!"# the !arger the tota! samp!e si.e and the more strata# the better the achieved precision 'i!! be.

0b)

0c) 0))

Do!!ar unit samp!es.

0a)

If the frame is homogenous# then the minimum samp!e re$uired is 1 samp!e of 1// units. A homogenous frame is one 'ith !o' variabi!it" in do!!ars and characteristics 0i.e. simi!ar

1) December )//)

Focused Assessment Program

Exhibit 6A Appendix I

do!!ars and characteristics). Indicators of !o' do!!ar variabi!it" are !o' s&e'ness# !o' standard deviation# !o' %7 0E 6/3) and no obvious do!!ar brea&s or groupings. Jo' characteristic variabi!it" 'ou!d be a frame 'ith no obvious groupings b" characteristics.

0b)

If the frame is nonhomogenous due to high do!!ar variabi!it"# then the minimum samp!e re$uired is 1 samp!e of 1// units. Indicators of high do!!ar variabi!it" are high s&e'ness# high standard deviation# high %7 0F 6/3) and obvious do!!ar brea&s or groupings. If the frame is nonhomogenous due to high characteristic variabi!it"# then the minimum samp!es re$uired are mu!tip!e samp!es of 6/ units each 0one for each characteristic grouping). ?igh characteristic variabi!it" 'ou!d be a frame 'ith obvious groupings b" characteristics. Ph"sica! unit samp!ing is usua!!" better at hand!ing high variabi!it" in characteristics. 9ut if c!usters are present 'hich 'ou!d be difficu!t to revie' in their entiret" and if there on!" ) or * major characteristic groupings# then do!!ar unit samp!ing ma" sti!! be used. Benera!!"# the !arger the tota! samp!e si.e 0or the more samp!es for characteristic variabi!it")# the better the achieved precision 'i!! be.

0c)

0d)

b) 4amp!ing parameters for variab!e samp!es 'i!! be I63 confidence !eve! and desired precision percentage E 1//3. he desired precision percentage shou!d be based on auditor judgment of 'hat is acceptab!e for the situation. he achieved precision percentage 'i!! be compared to the desired precision percentage 'hen determining the acceptabi!it" of the projection. II. SELE(T THE SAMPLE A. Nonstatistical samples. 1. 4ince nonstatistica! samp!ing is based on auditor judgment# an" se!ection method appropriate for the circumstances ma" be used. he auditor shou!d &eep in mind the audit and samp!ing objectives 'hen determining the best se!ection process. ). 4ome common techni$ues are as fo!!o's: a) Purposive testing is a method that attempts to se!ect samp!e items 'ith &no'n or suspected prob!ems. his method 'ou!d be appropriate for the FA PA4# 'hich is a ris&,based surve" to find prob!ems if the" exist. he auditor 'ou!d se!ect the highest ris& areas-items.

1* December )//)

Focused Assessment Program

Exhibit 6A Appendix I

b) %ross,section testing is a method that se!ects samp!e items from a!! parts of the area being tested. A common techni$ue is to designate a fixed percentage to test# such as )3# and then se!ect ever" nth item to reach the )3. If this method emp!o"ed a random start# it 'ou!d actua!!" be a statistica! s"stematic interva! se!ection. 9ut often# items are just chosen hapha.ard!" across the area being tested unti! the desired $uantit" is obtained. his method 'ou!d be appropriate for FA PA4 if there 'ere no identified higher ris& areas or items on 'hich to focus c) Jarge do!!ar testing is a method that se!ects the !argest do!!ar items for revie'. Emphasis is p!aced on the materia!it" of the items se!ected. his cou!d be appropriate for FA PA4 if the higher do!!ar items are determined to be the highest ris& items. ?o'ever# &eep in mind that a brea&do'n of interna! contro!s is often more pronounced in the !o'er do!!ar items. d) 9!oc& testing is a method that se!ects specific b!oc&s of units. he b!oc&s ma" be periods of time or consecutive groupings# such as a!! expense vouchers in Lune or a!! invoices 'ith vendor names beginning 'ith the !etters + through P. his method 'ou!d be appropriate for FA PA4 on!" if the se!ected b!oc&s represent the high ris& areas-items. e) %onvenience testing is a method of se!ecting the most convenient samp!e items for revie'. he most readi!" avai!ab!e items are se!ected# 'ithout reason or randomness# simp!" because it is expedient. @ecords that are in storage# in the bottom or bac& of fi!e dra'ers# not "et fi!ed# or at another !ocation are exc!uded 'hen this t"pe of testing is used. his method rare!" ref!ects good auditor judgment# ma" be manipu!ated b" the auditee# and is not recommended for an" audit situation. B. Attri#!te disco"er and "aria#le ph sical !nit sampling. 1. he same se!ection methods ma" be used for both attribute discover" and variab!e ph"sica! unit samp!ing because both statistica! samp!ing t"pes se!ect ph"sica! units for revie'. he fo!!o'ing are samp!e se!ection options: a) E=,>uant @A2M+ 0D(4 7ersion *.1/) or @andom 2umbers Benerator 08indo's 7ersion 1./.1) is a procedure that generates random numbers that can then be manua!!" or e!ectronica!!" app!ied 0using macros or mini,programs) to a frame to se!ect the samp!e items. It is suitab!e for an e!ectronic frame# a numbered printout or !isting# or a numbered ph"sica! item frame. It cou!d a!so be used 'ith

).

15 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

a sma!! unnumbered printout-!isting or ph"sica! items frame# but the frame 'ou!d have to be manua!!" numbered before the samp!e items cou!d be se!ected. his procedure can be used for manua!!" stratified ph"sica! unit samp!es. If obvious do!!ar brea&s or characteristic brea&s 'ere identified during frame ana!"sis# then @A2M+ ma" be run for each manua!!" identified stratum to random!" se!ect the samp!e items. b) E=,>uant @A4E> 0D(4 7ersion *.1/) or @andom 2umber 4ets Benerator 08indo's 7ersion 1./.1) is a procedure that generates sets of random numbers that can then be app!ied to a frame to se!ect the samp!e items. It is suitab!e for an unnumbered printout-!isting or an unnumbered ph"sica! item frame 'ith a hierarchica! structure. For examp!e# the first number in the set 'ou!d represent the page or dra'er and the second number in the set 'ou!d represent the !ine on the page or the fi!e in the dra'er. It can be used 'hen stratification is not necessar"# the frame is a!read" stratified# or the frame can be stratified prior to samp!e se!ection. c) E=,>uant 4 @A 0D(4 7ersion *.1/) or Ph"sica! Mnit 4amp!e 4e!ection Procedure 08indo's 7ersion 1./.1) is a procedure that can stratif" 0on do!!ars) and random!" se!ect ph"sica! units. It is suitab!e for an e!ectronic frame or a sma!! printout-!isting that can be t"ped into the program. It can be used for attribute discover" samp!e se!ection b" specif"ing 1 random stratum and no high do!!ar stratum-items. For variab!e ph"sica! unit samp!es# the procedure 'i!! automatica!!" sort and stratif" the frame into e$ua! do!!ar strata# and then random!" se!ect samp!e items for each stratum. It 'or&s best 'ith a frame that is high!" variab!e in terms of do!!ars# but not in terms of characteristics. If obvious do!!ar brea&s or characteristic brea&s 'ere identified during frame ana!"sis# then E=,>uant @A2M+ 0@andom 2umbers Benerator)# ma" be used instead to random!" se!ect samp!e items for each manua!!" identified stratum. d) +anua! s"stematic interva! se!ection is a procedure for manua!!" se!ects ever" nth item 'ith a random start. It shou!d be considered 'hen the on!" avai!ab!e frame is an unnumbered ph"sica! item frame and se!ecting ever" nth item 'ou!d resu!t in a better cross,section of items or 'ou!d be easier and $uic&er than using @A4E>. he process is as fo!!o's: 01)
Estimate the frame si.e 0if un&no'n). It is better to underestimate than overestimate.

16 December )//)

Focused Assessment Program

Exhibit 6A Appendix I runcate

0)) 0*)

%ompute the interva! 0frame si.e - desired samp!e si.e). the resu!t to a 'ho!e number.

@un E=,>uant @A2M+ 0@andom 2umbers Benerator) to get a random start bet'een 1 and the interva!. he random start 'i!! be the first samp!e item. Add the interva! to the random start to get the second samp!e item. %ontinue adding the interva! to se!ect the rest of the samp!e items. Do not automatica!!" stop 'hen the desired samp!e si.e is achieved. he process is not comp!ete unti! the end of the frame is reached. o stop before the end of the universe 'ou!d inva!idate the statistica! samp!e because ever" item 'ou!d not have an e$ua! chance of se!ection. he actua! samp!e si.e ma" be s!ight!" !arger than the initia! desired samp!e si.e. he samp!e ma" be proper!" expanded b" removing the previous!" se!ected samp!e items from the frame and repeating the above steps 0ca!cu!ating a ne' interva!# running E=,>uant @A2M+ @andom 2umbers Benerator to get a ne' random start# and se!ecting the additiona! items from the revised frame). he samp!e ma" be proper!" decreased b" random!" 0using E=, >uant @A2M+ @andom 2umbers Benerator) se!ecting items for remova! from the entire samp!e. It 'ou!d not be proper to mere!" disregard the !ast items se!ected. o do so 'ou!d inva!idate the statistica! samp!e because ever" item 'ou!d not have an e$ua! chance of se!ection.

05) 06)

06)

0C)

e) (ther computer programs# such as +icrosoft Access or 4A4# ma" be used if the e!ectronic frame is too !arge to fit into +icrosoft Exce! 0for ana!"sis# manua! stratification# or app!ication of random numbers) or too !arge to fit into E=,>uant 4 @A Ph"sica! Mnit 4amp!e 4e!ection Procedure 0for stratification and-or samp!e se!ection). Auditors shou!d consu!t 'ith a %A4 if the" encounter this situation. (. )aria#le dollar !nit sampling. 1. Do!!ar unit samp!ing is uni$ue in that it random!" se!ects do!!ars instead of ph"sica! units. he se!ected do!!ars 0do!!ar hits) are then tied to ph"sica! units 'hich are revie'ed. ). he fo!!o'ing se!ection methods ma" be used for do!!ar unit samp!ing: a) E=,>uant DM44EJ 0D(4 7ersion *.1/) or Do!!ar Mnit 4amp!e 4e!ection Procedure 08indo's 7ersion 1./.1) is an automated s"stematic interva! se!ection procedure. It 'or&s 'ith an e!ectronic frame or a sma!! printout-!isting that can be t"ped into the program.

16 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

he procedure 'i!! identif" the do!!ar hits# but if the samp!ing units are c!usters# then the ph"sica! items associated 'ith each do!!ar hit must be identified manua!!". his is done b" ca!cu!ating cumu!ative tota!s for the c!uster items and then !ocating the item 'ithin the c!uster that contains the do!!ar hit. b) +anua! s"stematic interva! se!ection. his method manua!!" se!ects ever" nth do!!ar 'ith a random start. 8hi!e it is possib!e for use 'ith a printout or !isting# it is genera!!" not recommended for do!!ar unit samp!ing due to the amount of effort re$uired to manua!!" se!ect the do!!ar hits. c) (ther computer programs# such as +icrosoft Access or 4A4# ma" be used if the e!ectronic frame is too !arge to fit into +icrosoft Exce! 0for ana!"sis) or too !arge to fit into E=,>uant DM44EJ Do!!ar Mnit 4amp!e 4e!ection Procedure 0for samp!e se!ection). Auditors shou!d consu!t 'ith a %A4 if the" encounter this situation. III. D.(/MENT ALL ASPE(TS .* THE SAMPLE PLANNIN- AND SELE(TI.N A. A!dit doc!mentation m!st f!ll and clearl doc!ment all aspects of the sampling that was !sed. This doc!mentation m!st #e prepared for each sample &nonstatistical and statistical' and m!st compl with a!dit doc!mentation policies. B. The following sample planning and selection items sho!ld #e incl!ded for each sample0 1. A samp!ing p!an that documents the samp!e p!anning and se!ection must be inc!uded. 4tandard samp!ing p!an forms for this purpose are contained in Appendix I7. he sections !abe!ed 4amp!ing App!ication# 4amp!ing Approach# Mniverse and Frame Information# and 4amp!e Information pertain to samp!e p!anning and se!ection and shou!d be comp!eted at this point. ). he samp!ing frame itse!f must be inc!uded as part of the audit documentation. E!ectronic frames can be direct!" incorporated into the automated 'or&ing papers. If the frame is hard cop"# it can be scanned in or maintained separate!" if too vo!uminous for scanning. If it is maintained separate!"# it shou!d be proper!" exp!ained and referenced in the automated documentation in accordance 'ith audit documentation po!icies. he procedures used to va!idate the samp!ing frame must be documented. An" ana!"sis or fi!e comparisons done in an attempt to va!idate the frame as an ade$uate representation of the intended universe must be ade$uate!" exp!ained.

*.

1C December )//)

Focused Assessment Program

Exhibit 6A Appendix I

5. Ana!"sis of the samp!ing frame variabi!it" must be thorough!" exp!ained and documented. his 'ou!d inc!ude the ca!cu!ation of measures of centra! tendenc" and indices of dispersion 0mean# median# mode# standard deviation# and coefficient of variation)# the determination of an" obvious do!!ar or characteristic groupings for manua! stratification# and identification of specia! items for separate or no revie'. hese ana!"ses and the re!ated conc!usions must be fu!!" and c!ear!" presented. 6. he samp!e si.e and ho' it 'as determined must be inc!uded. For attribute discover" samp!ing# this 'ou!d inc!ude the E=,>uant A DI4% Attribute 4amp!e 4i.e Determination Procedure output. For variab!e samp!ing# this ma" be a conc!usion on the frame ana!"sis documentation exp!aining the app!ication of the samp!e si.e guide!ines based on the frame variabi!it". he random se!ection methodo!og" must be documented. his inc!udes the random numbers or random procedure app!ied for statistica! samp!es or the judgmenta! procedure and reasoning for nonstatistica! samp!es. E=,>uant output and its app!ication to the frame 0if used) must be inc!uded and exp!ained. he se!ected samp!e items themse!ves shou!d be proper!" documented. his ma" be accomp!ished 'ith the samp!e se!ection documentation and-or the samp!e revie' documentation.

6.

C.

G. An" other documentation produced during the samp!e p!anning and se!ection shou!d be inc!uded as appropriate. I). 1E)IE2 THE SAMPLE A. 1e"iew each sample item. 1. Perform the revie' of each samp!e item based on the estab!ished criteria and audit program as re$uired to achieve the audit and samp!ing objectives. ). Mse the standard @A+I4 'or&sheet and add an" additiona! co!umns re$uired to perform and document the revie'. B. Determine the ca!se of each error and whether it is s stemic, nons stemic and rec!rring,nonrec!rring. 1. he cause of the error is critica! to understanding the nature of the prob!em and ma&ing appropriate recommendations. he nature of the error is a!so important for proper computation of comp!iance rates and projection of do!!ar impact.

1G December )//)

Focused Assessment Program

Exhibit 6A Appendix I

). Each error 'i!! be identified as s"stemic or nons"stemic A2D recurring or nonrecurring for this purpose. a) 4"stemic errors are those caused b" a deficienc" in the s"stem of interna! contro!s. If the s"stem is corrected or interna! contro!s strengthened# the error shou!d not recur. %!erica! or human error 0especia!!" if such errors are repetitive) that occurred because there 'ere no interna! contro!s in p!ace to tr" to prevent or catch such errors 0i.e.# training# supervision# 'ritten instructions# monitoring# chec&ing# etc.) 'ou!d a!so be s"stemic. 4"stemic errors are a!so recurring errors# even if on!" one is found# because the" cou!d recur due to the s"stem deficienc". (n!" s"stemic errors are inc!uded in the determination of comp!iance. b) 2ons"stemic errors are those not caused b" an" apparent 'ea&ness in interna! contro!s. "pica!!" these are occasiona! c!erica! or human errors that occurred despite ade$uate interna! contro!s 0i.e.# training# supervision# 'ritten instructions# monitoring# chec&ing# etc.). 2ons"stemic errors ma" a!so be recurring if the" disp!a" a pattern or trend that the" are !i&e!" to recur. For examp!e# repetitive c!erica! errors ma" be indicative of some sort of 'ea&ness in the interna! contro!s# such as incompetent personne!# inade$uate training# !ac& of supervision or monitoring# etc. he designation of s"stemic or nons"stemic is re$uired for the determination of comp!iance. (n!" s"stemic errors are inc!uded in the computation of comp!iance rates. 2ons"stemic errors are not used 'hen ca!cu!ating comp!iance rates c) @ecurring errors are those that cou!d recur in the frame from 'hich the samp!e 'as ta&en. "pica!!" these are s"stemic errors. he" ma" a!so be nons"stemic errors that disp!a" a pattern or trend that the" are !i&e!" to recur 0e.g.# repetitive c!erica! errors are recurring errors). he designation of recurring or nonrecurring is re$uired for revenue projection. (n!" recurring errors are projected. 2onrecurring errors are not projected. ?o'ever# nonrecurring errors shou!d be added to the projected revenue !oss 'hen ca!cu!ating tota! revenue !oss. d) 2onrecurring errors are those that 'ou!d not be expected to recur in the frame from 'hich the samp!e 'as ta&en. "pica!!" these are nons"stemic# iso!ated c!erica! or human errors that occurred despite ade$uate interna! contro!s 0i.e.# training# supervision# 'ritten instructions# monitoring# chec&ing# etc.). he" cou!d a!so be errors found outside the samp!ing frame. he designation of recurring or nonrecurring is re$uired for revenue projection. (n!" recurring errors are projected. 2onrecurring errors are not projected. ?o'ever# nonrecurring errors shou!d be added to the projected revenue !oss 'hen ca!cu!ating tota! revenue !oss.
1I December )//)

Focused Assessment Program

Exhibit 6A Appendix I

).

E)AL/ATE THE SAMPLE 1ES/LTS A. (alc!late compliance% if applica#le. 1. %omp!iance# 'hen app!icab!e 0i.e. the determination of comp!iance is an audit-samp!ing objective)# 'i!! genera!!" be based on the va!ue of s"stemic errors found in the samp!e. 4ee Appendix I7 of this document and FA Program Exhibit *F for more guidance on ho' to compute comp!iance rates. ). @emember that it is genera!!" not appropriate to compute comp!iance rates based on the resu!ts of sma!! nonstatistica! samp!es. B. (alc!late the total re"en!e d!e. 1. Joss of revenue estimates shou!d be based on the most accurate information avai!ab!e. Actua! amounts# if &no'n 0e.g. 1//3 revie' 'as performed)# 'ou!d be the first choice. (ther'ise# statistica! projections or other reasonab!e means of estimating revenue due ma" be used. ). 4tatistica! projections. a) E=,>uant 4A+PJ Ph"sica! Mnit 4amp!e Eva!uation Procedure ma" be used to project revenue due for attribute discover" and variab!e ph"sica! unit samp!es. he procedure projects the samp!e revenue due to the universe and provides re!iabi!it" measures for eva!uating that projection. It provides t'o point estimates 0one for the ratio method and one for the difference method) a!ong 'ith associated precision do!!ars and confidence interva!s based on the confidence !eve! specified. he confidence !eve! used 'i!! be I63. he point estimate 'ith the !o'est precision percentage 0precision do!!ars point estimate) shou!d be se!ected. b) E=,>uant DM4A+ Do!!ar Mnit 4amp!e Eva!uation Procedure ma" be used to project revenue due for variab!e ph"sica! unit samp!es. he procedure projects the samp!e revenue due to the universe and provides re!iabi!it" measures for eva!uating that projection. It provides a point estimate a!ong 'ith associated precision do!!ars and confidence interva!s based on the confidence !eve! specified. he confidence !eve! used 'i!! be I63. c) (ther computer programs# such as +icrosoft Access or 4A4# ma" be used to statistica!!" project and eva!uate statistica! samp!e resu!ts if e!ectronic fi!es are too !arge for E=,>uant 4A+PJ Ph"sica! Mnit 4amp!e Eva!uation Procedure or E=,>uant DM4A+ Do!!ar Mnit 4amp!e Eva!uation Procedure. Auditors shou!d consu!t 'ith a %A4 if the" encounter this situation.

)/ December )//)

Focused Assessment Program

Exhibit 6A Appendix I

d)

he achieved precision percentage 0precision do!!ars - point estimate) shou!d be compared to the desired precision percentage from the samp!ing p!an 'hen determining the acceptabi!it" of the point estimate. If the achieved precision percentage is N the desired precision percentage# then the projection is acceptab!e. (ther'ise# the samp!e methodo!og" and samp!e errors must be reeva!uated to determine the appropriate course of action. 4ee the 4amp!e @esu!ts A Dut" Due section of the samp!ing p!ans in Appendix I7 for various options.

*.

ota! revenue due shou!d be compared to Enforcement Eva!uation eam 0EE ) thresho!ds and referred as appropriate.

(. (alc!late the total "al!e impact. 1. ). he tota! va!ue impact is needed for comparison to EE thresho!ds for potentia! referra!. he tota! va!ue impact is a manua! ratio ca!cu!ation projecting the va!ue of the samp!e errors to the universe. 4ee the 4amp!e @esu!ts A 7a!ue Impact section of the samp!ing p!ans in Appendix I7 for detai!ed ca!cu!ations.

D. Determine the impact on other ears or areas. 1. Auditors shou!d consider the impact of their samp!e resu!ts on other universes# such as other "ears or areas. ). Benera!!"# projections of samp!e resu!ts shou!d be !imited to the universe from 'hich the samp!e 'as dra'n. Items examined in one universe ma" not be representative of other universes and projecting to other universes 'ou!d not statistica!!" defensib!e. ?o'ever# auditors ma" express their opinion and ma&e nonstatistica! app!ications if the" be!ieve the resu!ts app!" to another universe. )I. D.(/MENT THE SAMPLE 1ES/LTS E)AL/ATI.N A. A!dit doc!mentation m!st f!ll and clearl doc!ment all aspects of the sampling that was !sed. This doc!mentation m!st #e prepared for each sample &nonstatistical and statistical' and m!st compl with a!dit doc!mentation policies. B. The following sample res!lts e"al!ation items sho!ld #e incl!ded for each sample0 1. A samp!ing p!an that documents the samp!e resu!ts eva!uation must be inc!uded. 4tandard samp!ing p!an forms for this purpose are contained in Appendix I7. he sections !abe!ed 4amp!e @esu!ts A Errors# 4amp!e
)1 December )//)

Focused Assessment Program

Exhibit 6A Appendix I

@esu!ts A %omp!iance# 4amp!e @esu!ts A Dut" Due# 4amp!e @esu!ts A 7a!ue Impact# and 4amp!e @esu!ts A (ther Oears-Areas pertain to samp!e resu!ts eva!uation. hese sections shou!d be comp!eted at this point. ). *. 5. 6. 6. he determination of comp!iance and ho' ca!cu!ated. he tota! revenue due and its method of ca!cu!ation. his 'ou!d inc!ude the E=,>uant input and output if statistica! projections are used. he ca!cu!ation and ana!"sis of the resu!ting precision percentage and an" actions ta&en for unacceptab!e precision must be inc!uded. he tota! va!ue impact# ho' ca!cu!ated# comparison 'ith EE thresho!ds# and referra! to EE if app!icab!e. he impact on other "ears-areas and ho' determined.

C. An" other documentation produced during the samp!e resu!ts eva!uation shou!d be inc!uded as appropriate. )II. 1EP.1T THE SAMPLE 1ES/LTS A. A ta#le of sampling information will #e incl!ded in the a!dit report for each sample &nonstatistical and statistical'. The ta#les will show the sample n!m#er and re"iew area% frame description% sampling approach% frame si+e,"al!e,d!t % and sample si+e,"al!e,d!t . See Appendi3 ) for e3amples. B. In addition% the a!dit report sho!ld incl!de an comp!ted compliance rates and total re"en!e loss comp!ted.

)) December )//)