Mich. Admin. Code R. 205.2009 - Field audit sampling and sampling projections
Rule 9.
(1) When
designing an audit sample, auditors must consider the purpose of the audit
procedure and the characteristics of the population from which the sample will
be drawn. The auditor may use statistical or nonstatistical sampling. The
sampling method shall be determined on a case-by-case basis. The auditor may
consider the circumstances of the audit, the type of taxpayer entity, and the
taxpayers internal control system
(2) Auditors must select items for the sample
in such a way that the auditors can reasonably expect the sample to be
representative of the relevant population and likely to provide the auditors
with a reasonable basis for conclusions about the population.
(3) Auditors must perform audit procedures,
appropriate to the purpose, on each item selected.
(4) Auditors must investigate the nature and
causes of any deviations or misstatements identified and evaluate their
possible effect on the purpose of the audit procedure and on other areas of the
audit.
(5) Auditors must project
the results of audit sampling to the population.
(6) Auditors may use either statistical or
non-statistical sampling of the audited persons books and records to provide
sufficient evidence to form a conclusion about the correct tax liability.
Non-statistical sampling includes judgmental samples, random samples, simple
random sampling, systematic sampling, and cluster sampling or any other
sampling method that does not involve statistical evaluation.
(7) Whenever 2 or more accounting populations
for a particular tax return are combined and examined with the aid of a
statistical sample, the sample result can be combined according to the rules
for a stratified sample.
(8) When
sampling the same accounts for multiple years, the auditor may combine the
accounts into 1 population. The result must be projected by a reasonable method
that the auditor determines prior to selecting the sampling units.
(9) If an audited person does not have
sufficient records or fails to provide records, the auditor shall determine the
best information available and base the estimated tax liability on that
information.
Notes
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