The selection is based on a few steps, which are explained below.
Brief review of the audits carried out during the same period of the previous year
Based on previous experience but also on trend analysis and risk analysis via IT software, the section head 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 the fulfillment of the programs.
Identification of priority economic activities for auditing through management reports
The heads of the audit offices in cooperation with the section head should have a good knowledge of the economic activities that are continuously monitored by the assessment and collection inspectors. After conducting a preliminary analytical assessment, they must 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 businesses of other tax sectors and the most problematic activities in terms of concealment of obligations. Finally, they must focus on activities that demonstrate deviations from the average of the sectors in which they operate or repeated cases of non-declaration of their activities and tax obligations thereof.
Identification of high-risk taxpayers using the results of the computer-based screening program
The identification of high-risk taxpayers and the submission of a monthly plan constitute one of the most important steps in the analysis to assess 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 has to do with general risk trends and audit potentials, in order to guide work in those areas where potential risks are most likely and greatest. In this identification process, the purpose of the examination would not be oriented to all risks, but rather, on the contrary, it would focus 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 continually adapt the methods used for risk identification accordingly.
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 head should identify the time elapsed since the last audit and be guided by it. The longer this period of time is, the more imperative the need for an audit will be. On the other hand, in the monthly plan, the head of the section must present the audit scheme to the Head of the tax office. Said scheme must be supported with arguments and reasons for the causes of the lack of inspection in some taxpayers.
The time and effort devoted to an audit must be proportional to the risk that taxpayers represent in terms of revenue. In order to make the most of time, most audits will be fiscal visits carried out in short periods of time to check the accuracy of declarations and payments. The audit is carried out for a selected tax period and can only be limited to a selected tax type.
Ensuring audit quality
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 head 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 head 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 audit quality for a selected tax is of a high standard, reviewing 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 a lack of auditing. It is also necessary to establish an optimal relationship between these factors and the frequency of audits.
Considering the requirements of civil legislation to restore obligations derived from damages or other types of obligations infringed upon 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 audit objectives
The audit plan is closely related to the human, material and financial resources needed to perform 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 time needed based on the number of people available, it is compared with the time needed for compliance with the audit plan, identifying risks that may have a negative impact on compliance with the audit plan, such as: material insufficient, available financial and human resources, 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 complete 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 said fact and the reasons that justify it to the head of section and the latter submits the request and the reasons to the Head of the tax office. After reviewing the request for additional time and based on the number of transactions, offices and local units, the Head of the tax office requests the parent company to authorize additional time for the audit. The auditor may not audit at the taxpayer’s premises beyond the time specified in the authorization.