1. The Scope for Continuous Assurance In Tax Compliance
Ray Butler, CISA
Click for
Full Paper

2. The Scope for Continuous Assurance In Tax Compliance
Agenda
Potential
Benefits / Pitfalls
of continuous assurance for tax
Exploring
Theory / Issues
NOT :
Policy Statement
Description of anything in “Real World”
The Scope for Continuous Assurance In Tax Compliance

3. The Goals of a Tax Authority
Optimising Compliance
Provide Services to assist compliance
Ensuring fairness, equity and equality in the levying and collection of taxes.
The Scope for Continuous Assurance In Tax Compliance

4. The Scope for Continuous Assurance In Tax Compliance
Tax Assurance Scope
Macro Level
Returns on time / Liabilities Paid
Micro Level - Transactions
All Accurately Included ?
Reported at Correct Time ?
Belong to this business ?
Correct Deductibility / Liability ?
The Scope for Continuous Assurance In Tax Compliance

5. Continuous assurance in Tax
Checking Transactions for VAT
Capturing Liability “on the Fly”
Checking Customs Declarations From Manifests / Commercial Documentation
Monitoring Duty-free Transactions
Monitoring Payroll Transactions
The Scope for Continuous Assurance In Tax Compliance

6. The Scope for Continuous Assurance In Tax Compliance
Limitations
Limited To Recorded Transactions
Can’t Detect Unrecorded Income / Expenditure
May Not Detect Posting to Wrong Accounts
May Not Detect False Purchase Transactions
May Not Give ANSWERS, Will Give QUESTIONS
The Scope for Continuous Assurance In Tax Compliance

7. Benefits of Continuous Tax Assurance - Taxpayers
Reduction in the Cost of Compliance With Tax Requirements.
Facilitating Compliance Self-assessment
Assurance on Mainstream Business Activities
Peace of Mind
Cash Flow Control
The Scope for Continuous Assurance In Tax Compliance

8. Benefits of Continuous Tax Assurance - Tax Authorities
Reduction in Cost of Assurance Services
Improvement in Level of Assurance
Reduction in Errors – Improvement in Tax Yield
Improved / Quicker Trend Analysis
Cross-matching Transactions
Improved Monitoring of Case-specific Conditions
Running Liability Calculation
The Scope for Continuous Assurance In Tax Compliance

9. Risks involved - Taxpayers
Privacy
Over-Audit
Trading Partner Resistance
The Scope for Continuous Assurance In Tax Compliance

10. Risks involved – Tax Authorities
Over-reliance on recorded transactions
Privacy / security vulnerability
Legal Powers
Privacy legislation
Non-Repudiation / Authentication
The Scope for Continuous Assurance In Tax Compliance

11. How can Continuous Assurance for Taxes be Delivered ?
Built Into Applications
By Commercial Continuous Auditing Providers
By Application Service Providers as part of their services
By Revenue Authorities as part of their service to Business
Continuous or semi continuous assurance
On-demand data downloads
The Scope for Continuous Assurance In Tax Compliance

12. Potential Vehicles for Data Transmission
Common Elements
Header – Identification & Control data
Detail records
Encryption / Signature
Flat File
Special XML schema
XBRL GL etc
The Scope for Continuous Assurance In Tax Compliance

13. Conclusions & Way Forward
Issues to be addressed
Acknowledge Limitations
Resolve Legal Powers issues
Resolve Privacy issues
If Revenue Authorities provide CA Will this poison the well for commercial providers ?
More than just a national issue…
In five years……
The Scope for Continuous Assurance In Tax Compliance

14. The Scope for Continuous Assurance In Tax Compliance
Any Questions
The Scope for Continuous Assurance In Tax Compliance