This technical note addresses the following questions
What is the value of audit planning?
What should be considered in planning an effective taxpayer audit program?
How is an audit strategic plan developed?
How is an audit operational plan developed?
How is an audit case plan developed?
How can plans be evaluated?
Edmund Biber is a former Assistant commissioner of the Australian Taxation Office and a Member of the IMF’s Fiscal Affairs Department roster of experts.
For example, the Australian Taxation Office (ATO) issues “Taxpayer Alerts” as an early warning of concerns about significant and emerging potential aggressive tax planning issues.
It is widely accepted that VAT must be a self-assessed tax.
The audit program generally receives the largest slice of a tax administration‘s resource allocation, often over 30 percent. Refer to “Tax Administration in OECD and Selected Non-member Countries: Comparative Information Series (2006)“.
ATO annually publishes a “Compliance Program” that includes references to audit results of the previous year and planned current year audit activities and other initiatives to address risks to compliance. New Zealand Inland Revenue Department publishes an “Output Plan” that includes details of the budget devoted to audit activities and associated outputs and performance measures.
Single legislative act establishing common administrative provisions relating to all tax types rather than having these scattered throughout various substantive laws in respect of each tax.
Tools may include procedural manuals, practice notes, process maps, industry and taxpayer profiles, computers and IT applications that aid audit case selection, planning, and execution.
For example, outputs may be the number of audits, amended assessments, or revenue generated, and outcomes may be improvements in levels of compliance, quality of audits, or auditor productivity.
A number of administrations develop an audit plan as a protocol indicating the scope of the audit, duration, personnel, and taxpayer facilitation, in consultation with the taxpayer.