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IFTA and IRP Audit Workshop 2016 part 2

February 11, 2016

Written by Casey Bullard

On part 2 of the IFTA and IRP workshop, the big topics of conversation were electronic records, ELDs, and GPS. It’s important to recognize that not all systems are created equal. The difference boils down to the records available to the carrier, and what the device actually does. An auditors job is to make sure all the miles are being accounted for, but that can only be measured if the proper records are available.

Auditors call the systems that define, correct, and explain the records a carrier uses to create their tax returns Internal Controls. All data, not just electronic data, is run through the internal controls of a carrier. If the internal controls of electronic data are consistently implemented, and if they cover the bases the auditor isn’t likely to question the accuracy of the Data. The auditors job is changing from a data AND systems reviewer to mostly a systems reviewer.

This is an important change for two reasons. First because as GPS and its related products become more reliable and less expensive, it would be a waste of the auditors’ time to review data as long as the internal controls are good. And second because the exact format of data and records that auditors ask for varies from jurisdiction to jurisdiction. There is no single perfect report that will meet every auditor need and answer every question that arises.

Now let’s bring in the ELD mandate, because on its heels is going to come a rush of ELD providers and flood of electronic data. As the ELD requirements become more clear and as we get closer to the deadline, everybody is looking for a good system. But what defines a good system?

Part of the definition needs to address the internal controls of the ELD manufacture. In the event of an audit, the documentation and support offered by the manufacture could make all the difference between a good result and bad result. How they handle bad pings, tampering, and missing data will dramatically impact the “raw data” and what an auditor does with it. The carrier needs to understand the internal controls of the device and know how they match up with their own. A good system will be clear about its’ internal controls.

Another part of that definition needs to be the understanding of what a system does and does NOT do. The ELD mandates will not likely match up with the IFTA/IRP audit requirements because they come from different places. The ELD comes from the FMCSA and at its core is about Hours of Service and Safety. IFTA and IRP are about equalizing taxes for the fair and open use of the highway systems, and open commerce between all the jurisdictions. So if the ELD is only for hours of service, it’s not likely it will be enough for IFTA/IRP reporting.  A good system will meet the needs of the business.

A thing to consider is the sheer volume of data generated by GPS systems. Recordkeeping requirements for Hours of Service are 6 months, for IFTA/IRP realistically you need to keep records for 5 1/2 years.  How much data is there, where is it stored, and who is responsible for that storage?   A good system will help the carrier meet the recordkeeping requirements.

In the event of an audit the ultimate responsibility belongs to the carrier. The best defense is a good offence – choose a good system. It doesn’t matter what the sales guy promises, it maters what their internal controls actually do. It doesn’t matter what an agent says, or what the rumor mill down at the truck stop believes – it matters what the law says.

The quality of a carriers’ records will determine the outcome of an audit. And the quality of their records is completely in their hands.