Section 8a.1. Definitions

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

Audit period—The period of time for which the audit is conducted.

Block sample—One or more groups of transactions selected as a unit from a population. For example, invoices numbered 100 to 200, or transactions for the months of May and October.

Clustered sample—A statistical sample in which blocks of adjacent transactions are selected with known probability. A statistical sample of transactions within the blocks may be selected, creating a two-stage statistical sample.

Deviation from the mean—The numerical difference between a single statistical observation and the mean (average) of all of the statistical observations.

Outlier—A statistical observation that appears to deviate markedly from other members of the sample from which it came.

Population—The total transactions during an audit period from which the sample is selected.

Range—The numerical difference between the largest and smallest statistical observations in the sample.

Standard deviation—The square root of the average squared deviation from the mean.

Standard error—The standard deviation divided by the square root of the number of statistical observations in the sample.

Statistical estimation—A method of estimating the numerical characteristics of a population, such as averages, totals or ratios, from a statistical sample and estimating the precision of the estimated characteristics.

Statistical sample—A selection of transactions in which each of the transactions in the population, or a stratum from it, has a known chance of being selected. The term is also known as a probability sample.

Stratum—A subdivision of the population in which the transactions within the subdivision are expected to be more uniform with respect to the characteristics being examined than the transactions across the subdivisions.

Taxpayer—A person, association, fiduciary, partnership, corporation or other entity required to pay, withhold or collect any tax that is administered by the Department.

Test audit—An audit of sampled transactions selected by either a block sample or a statistical sample method.

Test period—A time period or periods selected for the test audit; for example, the month of May.

Transaction—The term includes an entry, document, invoice or other record regardless of the method of creation or retention.