This document provides guidance on auditing federal oil and gas royalties. It outlines the key steps in the auditing process, including: [1] sampling properties, products, and months on a test basis; [2] reviewing documentation like production reports, contracts, and price postings; [3] analyzing oil and gas volumes and prices for selected properties and test months; and [4] comparing calculated royalties to actual royalties paid. The document provides details on the various product types, sales arrangements, transportation and processing allowances, and how to determine if sales are arm's-length or non-arm's-length. It also covers pre-audit activities like setting up meetings, selecting the lease