Audit Procedures Flashcards
Mention Tax Audit Procedures !
- Notice
- Meeting
- Document Landing
- Sealing
- Rejection (Taxpayer)
- Rejection (Tax Auditor)
- Reason to Reject
- Audit Results
- Close Conference
Explain meaning and the type of “Notice” !
Notice = the taxpayer officially inform that the “ taxpayer will be audited”
2 type :
- Office Audit : Taxpayer go to tax office and bring the doc
- Field Audit : Auditor go to the business location / taxpayer office to conduct audit
What the Key Points of “Meeting”?
- ” Explanation by Auditor “
- Reason & Objectives ( why audits being done )
- Rights & Obligation ( what the taxpayer need to do : before and after audit ? ) - ” Taxpayer Rights “
- Can request additional meetings , if they need further “clarification” , so both parties can agree on certain “condition / adjustment “ during the audit. - ” Review and Records “
- Auditor may ask to “review” the taxpayers : book , document , and other records ( that are necessary for the audit )
What is the reason of “Meeting”?
To clarify key points about the audit.
Explain what is “Document Landing” ?
Document Landing = process where the auditor submit request , and the taxpayer allows access to key documents needed for the audit , either : physically or electronically
How the auditor request doc in “Document Landing” ?
- ” Request of Data “
- taxpayer must provided “requested doc” ; by bring them to the audit location ( either : office or field ) - ” Letter of Borrowing List “
- If : auditor needs to borrow data for further review
issue : formal letter (list : borrowed docs) - ” Special Equipment “
- Sometimes auditor need to access data : electronic / online systems ( taxpayer must provide access if requested )
Explain the Reason of “Sealing” ?
- “Tax Inspector is Not Granted Permission”
- tax payer refuse to let tax auditor to “examine key data / areas”, such as : - land , - building, - records (exp : Financial Statement )
- seal (area / records) : prevent : tempering - “Taxpayer Decline to Assist”
-Taxpayer refuse to help with the audit process , make the auditor difficult to access necessary information
- seal (data) : ensure data is preserved without taxpayer inteference - “Security Measures are Required”
- required before lastponed : because : no authorized person / taxpayer present - “Employee or Adult Representative Are Absent”
- employee / family member (representative) : unavailable / unwilling to cope
- seal ( data / audit material ) : prevent : tempering
Explain what is “Sealing” ?
PMK 17 / PMK 0.3 / 2023 : tax auditor have authority to seal -> to : get access & secures it .
To ensure that it is not tempered / lost / destroyed /… during audit.
( Simple ) State “Rejection (Taxpayer)” !
- Unfair
- Access to records : unreasonable
- Inquiry cost is high
- Filling A rejection Statement
- Rejections regarding access of records
- Rejections of audit due to inquiry cost
(Simple) Reason of “ Sealing “ ?
- taxpayer refuse : allow access
- taxpayer refuse : to help
- no authorized person is present : audit -> postponed
- taxpayer / responsible person : absent + refuse to cope , during audit
- Tax inspector not granted permission
- Taxpayer Decline to Asset
- Security Measures are Required
- Employee or Adult Representative Are Absent
Consequences of “ Rejection (Taxpayer) “ !
- legal action / escalation : fines, seal premises , seek court orders (suspect hidden docs and assets)
- Increased scrutiny : (repeated refusal -> will face stricter auditor in future)
- future relationship : damaged ( may deteriorate -> lead to : further complications )
(Simple) State “Rejection (Tax Auditor)” !
- taxpayer refuse to corporate
- Reject : Denial Event ( Complaint )
- High Inquiry Cost
- Report on Denial of Examination
- Report on the Denial Event
- Rejection of Audit due to Inquiry Cost ( 1 month delay )
Consequences of “ Rejection (Tax Auditor) “ !
- Incomplete Information -> Higher tax ability estimated
- Non compliance -> Penalties or Legal Action
- Fraud suspicion -> Financial record (sealed) for future audit
- Extended Obstruction -> Delays , Damaged relationship , Possible hostiity
(Simple) State the “Reason to Reject” !
- Refusal on Inspection / Ignoring the Invitation
-Field : * refuse : onsite inspection (compliance & accuracy) of FS
-Office : *ignore : formal invitation (meeting for discussion) - No Access
- Auditor lack of access
- Taxpayer’s Claim of Inaccessbility , because :
-> doc loss
-> no personeel
-> no access and are in format , at time of audit
State and Explain the step of “Audit Results” !
- SPHP -> send after audit done (to : taxpayer)
- LHP -> STP/SKP (inside SPHP)
- No SPHP -> if reject audit
- Taxpayer’s Response -> comply letter’s content as response
How long the “ Close Conference “ take place ?
6 months ; 2 month extension
review findings & issue , can clarify + add info ( to resolve any disputes (before) “final audit report” issued.
