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EXHIBIT C <br />Sample Procedures for "Complex" Dispensary MMT Audits <br />Phase 1 — Preliminary Risk Assessment <br />Perform risk assessment based on factors such as: <br />- The dispensary's familiarity with MMT requirements <br />- The dispensary's internal control structure <br />- Whether the dispensary has new personnel or substantially changed business processes or <br />systems <br />- Results of previous monitoring reviews, including the extent to which cash receipts and <br />revenues have been audited. Based on risk assessment results, various techniques can be <br />conducted to monitoring dispensaries activities, including desk reviews, on-site reviews, agreed- <br />upon procedures, or more in-depth reviews <br />Phase 2 — Revenue Audit <br />1. Planning Procedures <br />a. If business is a corporation or limited liability corporation, verify the ownership <br />names at the Secretary of State's website. <br />b. Obtain and review MMT and/or other tax returns filed and document sales <br />patterns. <br />c. Contact the dispensary to schedule an appointment to perform the agreed- <br />upon procedures. <br />d. Provide a copy of the CITY's MMT Ordinance to the dispensary <br />e. Document and confirm contact person's name, date, time, location of <br />appointment and mailing address. <br />2. Execution — General Procedures <br />a. Perform site visit at the dispensary and document the a) number of cash <br />registers, b) methods of payments accepted, c) products provided, and <br />numbers of employees. <br />b. Document the responses by the dispensary to the Business Operation and <br />Internal Control Survey Questions developed. <br />c. Document the number of MMT returns filed by the dispensary. <br />d. Reconcile MMT returns to Federal returns submitted to Internal Revenue <br />Services. Identify variance, <br />e. Haphazardly select a samples of 3 monthly CBT returns filed by the <br />dispensary and perform analysis and testing. <br />f. Obtain and review bank reconciliation (if available) prepared by the <br />dispensary. Agree balances and reconciliation items to supporting documents. <br />3. Execution - Reasonableness Test Procedures <br />a. Calculate the ratio of cash sales as a percentage of total sales. Identify <br />months in which cash sales percentage are more than 10% differ from the <br />average. <br />b. Compare the change in monthly sales from the preceding month to the <br />average change for all CITY dispensaries. Identify months in which change in <br />monthly sales are more than 10% differ from the CITY average. <br />c. Select daily or weekly sales worksheet prepared by the dispensary and <br />project monthly sales of the dispensary. Identify months in which projected <br />sales are more than 10% differ from the actual sales. <br />13 <br />