Criteria Used For Selection of Tax Audit

While planning and conducting the audit, the head of audit section should take into consideration and check the following indicators during the selection of taxpayers:

o Interrupted VAT declarations for tax periods;
o Accuracy of values declared in the Declaration Forms, which are not mathematically correct
o Purchase of fixed assets, benefiting from the special schemes of VAT;
o VAT payment indicators at a lower rate than the market price rate in the respective economic sector the taxpayer operates;
o Declarations and payments at suspicious levels of employment income tax and social and health insurance contributions;
o Taxpayers with unsettled tax obligations;
o Presentation and reflection of transactions in compliance with balance sheet with losses and effective rates lower than the minimum interest rates presented by banks.

Audits planned according to the above-mentioned indicators and are expalined as below:

Brief review of audits conducted during the same period of previous year
Based on the experience from the previous but also on the analysis of trends and risk analysis, the head of section proposes priority sectors for audit to the Head of tax office. These sectors will then be reflected in the audit plans. Establishing priority sectors for audit is not a spontaneous action but the outcome of analyses of objectives and their fulfillment and impact on the accomplishment of programs.

Identification of economic activities for audit priority using management reports

The heads of audit offices in cooperation with the head of tax audit should have good knowledge of the economic activities which are continuously monitored by the assessment and collection inspectors. After making a preliminary analytical assessment, they should also use management reports in order to take into consideration the economic sectors and activities which require greater attention. In order to make this decision they Cannabis Compliance Services should use multiple sources of information, other tax office sectors’ knowledge of businesses and most problematic activities in terms of hiding obligations. Finally, they should focus on the activities which 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 results from selection program based on IT system

Identification of high risk taxpayers and presentation of a monthly plan constitutes one of the most important steps in the analysis to assess hiding and avoidance by taxpayers. In fact, the entire audit process is a risk-based assessment process. However, identification of high risk areas in the audit plan has to do with general risk trends and audit potentials, in order to orient work in those areas where risk potentials are more probable and higher. In this identification process, the purpose of audit would not be oriented towards all risks, but, instead, it would focus on those risks and taxpayers which can have a decisive impact on the accomplishment of the objectives.

Risk assessment and period from last audit

Risk assessment implies the identification and analysis of risks threatening the accomplishment of audit objectives by establishing types and methods of audit, so that such risks can be avoided or minimized. Awareness of the fact that economic, industrial, technological, regulatory and operational conditions continuously change would help to continuously and accordingly adapt the methods used for risk identification.

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