# 1227.300 What audit functions may a State perform?
An audit consists of an examination of records to verify that royalty reports and payments accurately reflect actual production, sales, revenues and costs, and compliance with Federal statutes, regulations, lease terms, and ONRR policy determinations.
(a) If you request delegation of audit functions, you must perform at least the following:
(1) Submitting requests for records;
(2) Examining royalty and production reports;
(3) Examining lessee production and sales records, including contracts, payments, invoices, and transportation and processing costs to substantiate production and royalty reporting;
(4) Providing assistance to ONRR for appealed demands or orders, including preparing field reports, performing remanded actions, modifying orders, and providing oral and written briefing and testimony as expert witnesses.
(b) If necessary for a particular audit, you may also perform any of the following:
(1) Issuing engagement letters;
(2) Arranging for entrance conferences;
(3) Scheduling site visits; and
(4) Issuing record releases and audit closure letters; and
(5) Holding closeout conferences.
[62 FR 43084, Aug. 12, 1997, as amended at 75 FR 61087, Oct. 4, 2010]