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Statutory Brief · Quantification

How Statistical Extrapolation Works When Historical ERP Years Are Missing

When ERP migrations or 7-year document destruction purge bank reconciliations older than 2018, auditors project recent unresolved error rates across every missing historical year.

Key Statutory Findings & Holder Guidance

Formula Mechanics: Auditor calculates (Unresolved Sample Items / Base-Period Revenue or Total Disbursements) and multiplies that ratio by historical revenue for each non-researchable year.
Because every $1 left unresolved in the researchable base period amplifies across 5 to 8 missing years, remediating the base period is the highest-ROI step in any VDA or audit.
Note: Extrapolated estimation liabilities belong exclusively to the holder's State of Incorporation under Supreme Court priority doctrine.

Corporate finance and tax teams evaluating these rules should verify entity-specific incorporation history and prior filing logs before submitting positive or negative reports to state portals.