SECTION 5 – WARRANTY PERFORMANCE MEASUREMENT

5.3 THE WARRANTY CONSULTING AND AUDIT PROCESS STEPS

5.3.5 Warranty Audit Process Followed in Step 3 and/or Step 4 Follow-up Audit

At the Ford Auditor's discretion, the Audit will be completed using either:

• 100% Claim Review; or
• Sample Based Extrapolation

The methodology of the sample-based extrapolation audit will consist of the following:

1. The sample period will be typically selected to span between 6 - 12 months, though it may extend up to the record retention period, but not before the last company performed action.
2. All claims in this period that are subject to Audit will be sorted and allocated into a number of stacks.
3. These stacks will be more or less similar in Claim Count and Claim Value.
4. The Dealer will select which stack will become the sample.
5. The value of this stack will become the Audit Sample cost and any chargebacks/reversals within this stack will become a percentage of the Audit Sample.
6. This percentage will be applied to the total sample period and will be the chargeback amount for the Audit.
7. A 20% reduction of this chargeback amount will then be applied to address any sample anomaly and/or interpretation concerns.

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