Table 2.
Random Audit Descriptive Statistics
| Panel A. Descriptive Statistics | ||||||||||||
| Variable | N | Mean | Std Dev | P5 | P25 | P50 | P75 | P95 | ||||
| Out of Business | 2,508 | 0.33 | 0.47 | 0.00 | 0.00 | 0.00 | 1.00 | 1.00 | ||||
| Defunct | 2,508 | 0.02 | 0.15 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||
| Audit Adjustment | 2,508 | 6.724 | 59.789 | 0 | 0 | 0 | 810 | 17,890 | ||||
| Days Spent on Audit | 2,508 | 417 | 184 | 190 | 270 | 390 | 530 | 740 | ||||
| Hours Spent on Audit | 2,508 | 67 | 40 | 20 | 40 | 60 | 80 | 140 | ||||
| Receipts | 2,508 | 1.201.605 | 3,151,346 | 0 | 42,190 | 271,850 | 897,500 | 6,143,080 | ||||
| Assets | 2,508 | 60,714 | 72,293 | 0 | 0 | 29,440 | 106,840 | 215,290 | ||||
| Net Income | 2,508 | 209 | 165,663 | (60,980) | (6,230) | 0 | 8,040 | 55,620 | ||||
| Employees | 2,508 | 12 | 76 | 0 | 0 | 2 | 7 | 37 | ||||
| Wages | 2,508 | 413,698 | 1,603,252 | 0 | 0 | 32,540 | 209,181 | 2,000,910 | ||||
| Distress | 2,508 | 5,276 | 48,602 | 0 | 0 | 0 | 420 | 15,620 | ||||
| Panel B. Tests of Differences | ||||||||||||
| Control | NRP | Difference | ||||||||||
| N | Mean | Median | N | Mean | Median | T-Stat | Z-Stat | |||||
| Receipts | 2,508 | 1,210,522 | 271,790 | 2,508 | 1,201,605 | 271,850 | 0.41 | 0.21 | ||||
| Assets | 2,508 | 61,559 | 28,160 | 2,508 | 60,714 | 29,440 | 0.10 | 0.25 | ||||
| Net Income | 2,508 | (4,562) | 0 | 2,508 | 209 | 0 | -1.23 | -0.88 | ||||
| Employees | 2,508 | 13 | 2 | 2,508 | 12 | 2 | 0.23 | 0.41 | ||||
| Wages | 2,508 | 433,629 | 31,540 | 2,508 | 413,698 | 32,540 | 0.42 | -0.45 | ||||
| Distress | 2,508 | 6,885 | 0 | 2,508 | 5,276 | 0 | -0.13 | 1.11 | ||||
| Panel C. Correlation Table | ||||||||||||
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | ||
| Out of Business | (1) | 1.0000 | 0.1424 | 0.0380 | 0.0601 | -0.0815 | -0.2573 | -0.1985 | -0.1101 | -0.1982 | -0.2322 | -0.0382 |
| Defunct | (2) | 0.1424 | 1.0000 | 0.0928 | 0.1014 | 0.0545 | 0.0342 | -0.0063 | -00258 | 0.0501 | 00186 | 0.1751 |
| Audit Adjustment | (3) | 0.0608 | 0.1582 | 1.0000 | 0.3230 | 0.2382 | 0.1495 | 0.0672 | 0.1427 | 0.0380 | 0.0380 | 0.1457 |
| Days Spent on Audit | (4) | 0.0668 | 0.1063 | 0.1517 | 1.0000 | 0.5618 | 0.1172 | 0.0785 | 0.0200 | 0.0419 | 0.0205 | 0.1337 |
| Hours %lent on Audit | (5) | -0.0852 | 0.0472 | 0.0082 | 0.5400 | 1.0000 | 0.3512 | 0.2761 | 0.0741 | 0.2803 | 0.2702 | 0.1560 |
| Receipts | (6) | -0.1008 | -0.0142 | 0.0727 | 0.0676 | 0.1516 | 1.0000 | 0.6435 | 0.2389 | 0.7165 | 0.7499 | 0.2902 |
| Assets | (7) | -0.1809 | -0.0111 | 0.0361 | 0.0717 | 0.2095 | 0.2352 | 1.0000 | 0.1602 | 0.5130 | 0.5204 | 0.1827 |
| Net Income | (8) | -0.0334 | -00128 | -0.0258 | 0.0166 | 0.0136 | 0.0487 | 0.0029 | 10000 | 0.1024 | 0.1225 | 0.1320 |
| Employees | (9) | -00131 | 0.0782 | 0.1185 | 0.0538 | 0.0928 | 0.2862 | 0.1310 | -0M098 | 10000 | 0.9419 | 0.2752 |
| Wages | (10) | -0.1057 | -00138 | 0M293 | -0MO23 | 0M843 | 0.6697 | 0.1581 | 0M222 | 0A092 | 1.0000 | 0.2555 |
| Distress | (11) | 0M051 | 0.1675 | 0M160 | 0.0394 | 0.0643 | 0.0556 | 0M156 | 0M193 | 0.0440 | 0.0402 | 1.0000 |
This table presents descriptive statistics for the random audit sample (Panel A), a test of means for the random audit sample and its control group (Panel B), and a Spearman-Pearson correlation table (Panel C). In Panel B, t-statistics for tests of mean differences and z-statistics for tests of median differences (Wilcoxon signed-rank tests) are presented at the right. In Panel C, correlations that are statistically significant (p < 0.05) are bolded. The sample consists of one observation per firm, for the year it is selected for audit. IRS disclosure rules require that we do not disclose a statistic that relates to any specific taxpayer. Hence, percentile statistics are rounded to the nearest ten (except for Out of Business, Defunct, and Employees). For these variables, we take the average of the four observations above and below the statistic of interest. All variables are defined in Appendix 1.