Rules related to selection for tax audit purposes
The selection is based on a few steps, which are explained below.
Brief overview of the audits carried out during the same period of the previous year
Based on past experience but also on trend analysis and risk analysis through IT software, the section chief proposes priority sectors for audit to the Head of the tax office. These sectors will then be reflected in the audit plans. The establishment of priority sectors for the audit is not a spontaneous action but the result of analysis of objectives and their fulfillment and impact on program fulfillment.
Identification of priority economic activities for auditing through management reports
The heads of the audit offices in cooperation with the section chief must have a good understanding of the economic activities that are continuously monitored by the assessment and collection inspectors. After conducting a preliminary analytical assessment, they should also use management reports to take into account the economic sectors and activities that require further attention. To make this decision, they must use multiple sources of information, knowledge of the business of other tax sectors and the most problematic activities in terms of concealment of obligations. Finally, they should focus on activities that show deviations from the average of the sectors in which they operate or repeated cases of non-declaration of their activities and tax obligations related to them.
Identification of high-risk taxpayers using the results of the computer-based screening program
The identification of high-risk taxpayers and the presentation of a monthly plan constitutes one of the most important steps in the analysis to evaluate concealment and avoidance by taxpayers. In fact, the entire audit process is a risk-based assessment process. However, the identification of high-risk areas in the audit plan is concerned with overall risk trends and audit potentials, in order to target work on those areas where potential risks are most likely and greatest. In this identification process, the purpose of the inspection would not be oriented to all the risks, but, on the contrary, it would concentrate on those risks and taxpayers that can have a decisive impact on the fulfillment of the objectives.
Risk assessment and period since last audit
Risk assessment involves the identification and analysis of risks that threaten the achievement of audit objectives by establishing audit types and methods so that such risks can be avoided or minimized. The awareness that economic, industrial, technological, regulatory and operational conditions are continually changing would help to continuously and accordingly adapt the methods used for risk identification.
Based on the risk assessment and the priorities established above, the heads of the audit offices in cooperation with the section head will choose the audit scheme to adopt (full audits, thematic audits, etc.). When choosing the audit scheme, the section chief must identify the time elapsed since the last audit and be guided by it. The longer this time period, the more imperative the need for an audit becomes. On the other hand, in the monthly plan, the section chief must submit the audit scheme to the Head of the tax office. This scheme must be supported with arguments and reasons for the causes of the lack of control in some taxpayers.
The time and efforts devoted to an audit must be proportional to the risk that taxpayers represent in terms of income. In order to make the most of the time, most of the audits will be fiscal visits carried out in short periods of time to verify the accuracy of the declarations and payments. The audit is carried out for a selected tax period and can only be limited to a selected tax type.
Ensuring the quality of the audit
To comply with the monthly audit plan, the section chief must assess the level of use of the fiscal capacity of the auditors. The monthly plan also includes improvements to be made in terms of auditor qualification through a program attached to the plan. The section chief also presents the improvements to be made in terms of audit methodologies, techniques and time management of the auditors.
The monthly plan must convince the Head of the tax office and the Director of the Audit Directorate that the audits will be carried out with high quality and in accordance with the most advanced standards. To do this, the section chief presents the entire set of technical and organizational measures to be taken to ensure the required audit quality.
If, during a preliminary observation, the audit section chief finds that the quality of the audit for a selected tax is of a high standard, review of the selections made can ensure that the plan is effective and meets the objectives of the audit. audit. In order to use audit resources effectively, it is necessary to realistically assess the risks in the process of meeting the objectives and avoid the risks that could arise from the lack of auditing. It is also necessary to establish an optimal relationship between these factors and the frequency of audits.
Considering the requirements of the civil legislation to restore obligations derived from damages or other types of obligations breached by taxpayers in relation to their employees and third parties, in addition to the above factors, the maximum mandatory inspection period is not less than one inspection every two years.
How to manage the number of inspectors available according to the objectives of the audit
The audit plan is closely related to the human, material and financial resources necessary to carry out the audits. This includes the expected number of days and people spent by each taxpayer audited and the cost of the audit overall. After calculating the necessary time based on the number of people available, it is compared with the necessary time required for compliance with the audit plan, identifying the risks that may have a negative impact on compliance with the audit plan, such as: material insufficient, financial and human resources available, limited structures, sick leave and inspectors and lack of replacement in due time for various reasons, etc.
The duration of the audit is determined according to the schedule and the auditor is expected to finish the audit work and write the report during the audit visit within the established time frame. In case of lack of time, the auditor informs in writing of such fact and the reasons that justify it to the head of the section and he submits the request and the reasons to the Head of the tax office. After analyzing the request for additional time and based on the number of transactions, offices and local units, the Head of the tax office requests the head office to authorize additional time for the audit. The auditor may not audit the taxpayer’s premises beyond the time specified in the authorization.