Auditing Fundamentals

Chapter 7 – Sampling


The use of sampling techniques represents an effective method by which the Comptroller of Public Accounts may carry out the duty of tax administration. The use of sampling can contribute significantly to the overall goals of maximizing audit coverage and encouraging proper reporting practices. These goals, which benefit all Texas taxpayers, must be balanced by careful analysis and planning.

The Comptroller of Public Accounts has the statutory authority to conduct sample audits (TEX. TAX CODE ANN. Section 111.0042.) The use of sampling techniques is appropriate if any of the following conditions exist:

  • The taxpayer's records are so detailed, complex or voluminous that an audit of all detailed records would be unreasonable or impractical;
  • The taxpayer's records are inadequate or insufficient, so that a competent audit for the period in question is not otherwise possible; or
  • The cost of an audit of all detailed records to the taxpayer or to the state will be unreasonable in relation to the benefits derived, and sampling procedures will produce a reasonable result

General Policies on Sampling

The following general policies regarding sampling have been established by Audit Division and should be followed in all cases.

  • Written notification of the sampling procedures will be given to the taxpayer no later than after examination of 25% of the sample.
  • The notification will be hand delivered whenever possible (otherwise, mailed) and must be given or sent to the person designated by the taxpayer per Audit Questionnaire to make decisions regarding the conduct of the audit.
  • Sampling will be used in every audit situation where the conditions of the business and records meet the criteria authorized by the statute.
  • Whenever possible, a computer audit program will be used to extract data directly from taxpayer records.
  • Asset purchases will be detailed unless the auditor has established that a consistent and recurring pattern of acquisition exists.

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(Revised 10/2021)