(e) Once every 12 months, a provider who makes disclosures based upon internal estimated sales projections shall conduct an internal audit of its commercial financings. The audit shall cover all sales-based financings paid off during the previous 12-month period where the provider made disclosures based upon internal estimated sales projections, including transactions with contractually required true-up payments, but excluding transactions where:

1. (1) the provider or financer initiated legal action against the recipient in court or arbitration for breach of the contract or to collect amounts due under the contract;
2. (2) the provider or financer stopped collection of amounts due under a contract after determining that the recipient had violated the terms of the contract; or
3. (3) the provider modified the contract terms pursuant to an agreement with a recipient.

(i) After completing its audit, the provider shall calculate the weighted average of the audited APR spreads for the last three audits, the last five audits, and the last seven audits using the total number of transactions used to calculate the audited APR spreads for each audit period. A provider is not required to calculate a weighted average for the last three audits if the provider has not conducted three audits, the weighted average for the last five audits if the provider has not conducted five audits, or the weighted average for the last seven audits if the provider has not conducted seven audits.

1. (1) If the weighted average for the last three audits is greater than 15 percent, the provider shall not utilize the method described in this subdivision to calculate the required disclosure terms for 24 months, but shall instead employ the methods described in section 600.8 of this Part unless the provider determines that the method described in section 600.8 of this Part would have yielded a higher weighted average.
2. (2) If the weighted average for the last five audits is greater than 10 percent, the provider shall not utilize the method described in this subdivision to calculate the required disclosure terms for 24 months, but shall instead employ the method described in section 600.8 of this Part unless the provider determines that the method described in section 600.8 of this Part would have yielded a higher weighted average.
3. (3) If the weighted average for the last seven audits is greater than five percent, the provider shall not utilize the method described in this subdivision to calculate the required disclosure terms for 24 months, but shall instead employ the method described in section 600.8 of this Part unless the provider determines that the method described in section 600.8 of this Part would have yielded a higher weighted average.

(k) If a provider must make additional estimates or assumptions other than an estimate of a recipient’s future sales, income or receipts in order to provide disclosures required by this Part, the provider shall:

1. (1) base those estimates or assumptions on the best information reasonably available to the provider at the time of the disclosure;
2. (2) state clearly that any disclosure based upon an estimate or assumption is an estimate by adding the word “estimate” to the descriptive language of any required disclosure under this Part; and
3. (3) state clearly any assumptions or estimates used as the basis for the disclosure in any description associated with the disclosure.