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Audit of the Appellate Tax Board Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Appellate Tax Board.

Table of Contents

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Appellate Tax Board (ATB) for the period July 1, 2017 through December 31, 2019.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.

Objective

Conclusion

  1. Are mediation conferences conducted in a timely manner in accordance with Section G(ii) of Standing Order 1-88?

Yes

  1. Did the Mediation Program cause a significant decrease in the caseloads ATB heard, in comparison with the caseloads before the program was established?

Partially; see Other Matters

  1. Does ATB file its annual report as required by Section 4 of Chapter 58A of the General Laws?

No; see Finding 1

 

To accomplish our objectives, we gained an understanding of ATB’s internal control environment related to the objectives by reviewing applicable laws, regulations, and agency policies and procedures, as well as conducting interviews with management, and we reviewed the appeal process and the case management system.

We performed the following procedures to obtain sufficient, appropriate audit evidence to address the audit objectives.

Mediation Program

We obtained case data (e.g., docket number, appellant name, appellee name, petition type, filing date, case status, and closing date) for all appeals and their related case activity by date, for 100% of the 7,353 cases that were closed during our audit period, directly from Time Matters.

We then analyzed an ATB-provided document called Mediation Schedule List for valid data that listed all appeals that went through the Mediation Program, which is separate from Time Matters. The data included the docket number, appellant name, filing date, mediation date, and result. We also verified that each appeal in this schedule also existed in Time Matters by looking for equivalent docket numbers, which are unique to each appeal. Some fields2 are available in Time Matters but not the Mediation Schedule List; we created a joined table using the Mediation Schedule List and the Time Matters data to have access to all fields.

We interviewed ATB management to better understand the data fields. We then filtered the joined table by filing date, mediation date, and closing date to come up with a list of appeals that had gone through a complete mediation cycle (from date filed through date closed), which comprised 139 mediations.

We performed the following procedures to obtain sufficient, appropriate audit evidence to address the first audit objective.

  • We analyzed the 139 mediations to determine the cycle time3 during our audit period. We also computed a median cycle time and compared the cycle time for each mediation to the average track in Standing Order 1-88.4

We performed the following procedures to obtain sufficient, appropriate audit evidence to address the second objective.

  • Using the same process to determine cycle time, we computed the median cycle time for all of the 5,137 appeals we had selected for this calculation.5 We then compared the median cycle time of all closed appeals with the median cycle time of appeals that used the mediation process to assess whether the difference was significant.
  • We inspected the five types of applications (informal, formal, small claim, late entry, and Commissioner of Revenue) from ATB’s website to assess whether petitioners could select mediation on the application form.
  • We selected a nonstatistical random sample of 35 appeals out of a population of 139 to assess whether the mediation conference was held in the Boston office; whether both parties entered into mediation voluntarily; and whether the person who facilitated the mediation conference was an attorney, in accordance with ATB’s “Mediation Guideline” document. Since our sample was nonstatistical, we were not able to project the results to the population. ATB told us that all communication during a mediation conference is confidential and ATB does not keep any documentation on conferences.
  • To test whether the ATB caseload decreased significantly as a result of the Mediation Program, we queried the data from a Time Matters table of all appeals closed during our audit period and compared it to appeals closed for an approximately two-year period (July 1, 2013 through December 31, 2015) before the audit period, when the Mediation Program had not yet been implemented. We compared the median cycle times to assess whether the implementation of the Mediation Program resulted in a significant decrease in cycle time.

Annual Report

We performed the following procedures to obtain sufficient, appropriate audit evidence to address the third objective.

  • We assessed whether ATB delivered annual reports for 2017, 2018, and 2019 to the Legislature by December.6 We also inspected ATB’s annual reports to determine whether the following were included in accordance with Section 4 of Chapter 58A of the General Laws:
  • the number and types of activities performed by ATB during the preceding state fiscal year
  • the number of appeals pending at the end of the year
  • the numbers and types of cases assigned (to each member and in the aggregate)
  • the way each case was disposed of
  • the average length of time from the date of the close of the record to the issuance of a decision.
  • We reconciled the data in the ATB annual report for fiscal year 2019 to the data in Time Matters.

Data Reliability Assessment

To determine the reliability of the information obtained from Time Matters, we evaluated information security by conducting interviews, examining supporting documentation, and performing observations. Additionally, we performed validity and integrity tests of the data, which included (1) testing for missing data elements (e.g., case opening date), (2) scanning for duplicate records, (3) testing for values outside a designated range, (4) looking for dates outside specific periods, (5) testing for data validity errors, and (6) tracing a sample of claims to the source documents. We determined that the information was sufficiently reliable for audit testing.

2.     Each field is a unique column in a data table.

3.     Cycle time is the amount of time from when a full appeal is filed to the date it is closed. We calculated it by subtracting the filing date from the final closed date.

4.     This standing order recognizes the litigation process and adopts cycle time standards for the court system.

5.     We excluded telecommunication appeals because they are not good candidates for the Mediation Program, and we excluded cases filed more than two years from the earliest date closed because often they had been delayed for reasons outside ATB’s control.

6.     There is no set due date for the report; however, according to ATB, the board had a goal of December delivery each year.

 

Date published: February 9, 2021

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