Tax system in Pakistan is operating on self assessment basis aimed at promoting voluntary-compliance, documentation and self-policing. Tax Audit is an effective instrument of control with the FBR through which compliance level is monitored. Through Audit, the government checks whether a registered person/ taxpayer has correctly determined his tax liability, deposited due tax in the national exchequer and is making adjustments of input tax etc, to which he is legally entitled. In order to safeguard the government’s interests, FBR has established a central risk based and automated “Tax Audit Management System” (TAMS), which is constantly reviewed and improved.
In order to achieve the aforementioned goals, Taxpayers Audit wing was established in January 2003. It was assigned the task of restructuring and reforming the audit policy. The main tasks included drafting National Audit Manual, preparing National Audit Plan and training the FBR workforce in modern auditing techniques etc.
Planning and designing audit procedures.
Evaluating tax audits for all domestic taxes.
Devise and implement a National Audit Plan.
Design selection criteria for coverage of all higher risk areas.
Develop audit methodology to ensure audit quality.
Audit and Monitoring of Unlawful Sales Tax input adjustment.
Monitoring Post Refund Audit of Income Tax, Sales Tax and FED.
Desk Audit and resultant legal actions.
Any other duties assigned by Chairman FBR.
FBR is taking great care to ensure that audits are conducted in courteous, efficient, professional and effective manner as well as with highest standards of integrity.
Taxpayers are selected for audit on the basis of transparent, discretion free and automated process. The selection is done by computer, using different information items and parameters, without resorting to any identity details of the taxpayers.
Ensuring Integrity and Quality
An overall Integrity Program has been implemented within the organization. Auditors and Managers are expected to meet the highest ethical standards. Disciplinary actions will be initiated against those who choose to conduct themselves in an unethical manner. A quality review process has been established to ensure that prescribed standards and procedures are followed and there is uniformity in application of laws and procedures.
Periodic feedback from Field Formations and Tax Bars Associations is obtained to:
Gauge perception of the Audit Process.
Improve the overall audit process.
Evaluate the behavior, professionalism and competence of Audit staff.