Transcript Auditing SMEs

Organisation for Economic Co-operation and Development
Large Taxpayer Units
12. Responsibilities, mission and vision
statement of Large Business Units
Nairobi, 14 – 18 February 2011
Centre for Tax Policy and Administration
Common principles and themes in mission statements
(to contribute to and to improve voluntary compliance)
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improve customer service by providing high quality service to each
taxpayer in every interaction;
use of innovative methods to enhance customer service;
help taxpayers understand and meet their tax obligations;
enforcement of the tax law through fair and uniform application of the law;
use of risk-based approaches to manage compliance;
strengthen enforcement through compliance initiatives and innovative
approaches;
strengthen relationships and cooperation;
balance service and enforcement;
be responsive to the needs of large taxpayers in a global environment;
improve internal capabilities, process and technology; and
improve the skills and productivity of the workforce through a quality work
environment.
Different approaches
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All “statements” are intended to articulate the goals of
the organization and the measures to achieve them.
Some countries have a “mission” or “vision” statement
specifically designed for their large business unit and
these specific “statements” are linked to the overall
objective or mission of the whole tax administration.
Other countries do not have a “mission” or “vision”
statement specifically tailored for the large business
unit, but do have statements of objectives which are
consistent with the overall mission statement of the tax
administration.
Mission statement ATO
The ATO’s mission and the operating model of the Large Business and International (LB&I) are for the Income Tax
section of the large market – however, similar objectives exist for the goods & services tax , excise and fringe
benefits tax areas.
Our Intent - Our business intent is to encourage voluntary compliance among large business taxpayers by assisting
them to meet their income tax, capital gains tax and petroleum resource rent tax obligations, so that the
community can be assured of regular and appropriate revenue flows and have confidence that the system is
working properly.
Our Model - The ATO’s compliance areas use the Compliance model and taxpayer charter as business models of our
approach. The compliance model applies compliance products to the taxpayer depending on their behaviours
and risks e.g. self regulating taxpayers are given a service based approach whilst higher risk groups tend to be
audited. The taxpayer charter outlines the rights and expectations of taxpayers from the ATO.
Our Aspiration - To work closely with large business taxpayers, their advisers and representative bodies in the fair
administration of the income tax system, so that:
 they can be certain as to their obligations under the tax laws
 the systems we have in place make it as easy as possible to comply
 costs of compliance are kept as low as possible
 instances of non-compliance are dealt with speedily and firmly.
Our Role - LB&I’s primary role is to maintain the integrity and efficacy of the income tax system in relation to large
business taxpayers. We do this by promoting voluntary compliance through the provision of advice and
assistance as well as by undertaking active compliance activities.
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Vision statement of Large and Midsize Business
Division (LMSB) of the IRS US
The vision statement of the LMSB operating division of the Internal Revenue Service is:
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“We are a world-class organization, responsive to the needs of our taxpayers in a global environment,
while applying innovative approaches to customer service and compliance. We apply the tax laws with
integrity and fairness through a highly skilled and satisfied workforce, in an environment of inclusion
where each employee can make a contribution to the mission of the team.”
The Vision statement signifies how LMSB will drive toward achievement of agency mission and goals. This
vision statement describes our role and the public’s expectation about how we should perform that role. It is
derived from the overall Mission and goals of the Internal Revenue Service, which is:
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“Provide America’s taxpayers top quality service by helping them understand and meet their tax
responsibilities and enforce the law with integrity and fairness to all.”
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It is important to continuously strive to be “best in class” in ways that are important to us as a tax administrator. It
not only speaks to being efficient and effective, but doing our jobs with fairness and integrity. The ways in which
we identify and deal with compliance risk, the professional treatment of our taxpayers, and the quality of work life
for our employees are all factors that are considered in the health of an organization, and in being “world class”.
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It also requires a culture in LMSB that supports being a “world-class organization”. This involves continuous
employee engagement and open communications at all levels of the organization. It also involves a culture of
accountability and innovation, as well as, a strong sense of pride and responsibility in what we are charged to do,
administer the tax laws of the United States.
Organisation for Economic Co-operation and Development
11. Responsibilities, mission
and vision statement of Large
Business Units
The Netherlands
Nairobi, 14 – 18 February 2011
Centre for Tax Policy and Administration
Mission statement DTCA regarding Very Large
Business
The Netherlands
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The overall objective of the DTCA is to efficiently and
effectively collect the amount of tax due by maintaining
and improving voluntary compliance of taxpayers and
by acting repressively to those who are not complying
voluntarily.
We trust our taxpayer unless we have information they
cannot be trusted. Our intelligence function becomes
increasingly important.
Mission LBU The Netherlands(2)
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The quality of the tax control framework, the level of
transparency and the level of compliance determine the
level of (additional) supervision by the tax
administration. If we agree with the taxpayer on the level
of quality of the tax control framework and the taxpayer
is fully and actively transparent about the tax-risks
emerging from this framework the efforts of the DTCA
can be limited to discussing those risks real-time.
Mission LBU The Netherlands(3)
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We will not duplicate the auditing activities performed by
other (internal audit department, external auditor)
supervisors. Our audit efforts will predominantly be
directed at testing the quality of their work and whether
the control framework in the company functions as it
should. In the case the taxpayer has a poor quality tax
control framework and/or is not fully and actively
transparent we will have to audit retrospectively and
using different techniques.
Overview of horizontal monitoring
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Background horizontal monitoring
Forms of horizontal monitoring
Changes in focus
Individual convenants
Tax Control Frameworks
Changes in work and thinking
Background horizontal monitoring
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Report Scientific Advisory Council of Government
Policy (WRR): The future of the national constitutional
state (2002)
Program other government bodies, reducing rules,
better performances and more own responsebility of
the society
Forms of horizontal monitoring
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Individuals: prefilled tax returns and personal
domains
Small enterprises: tax returns based on a convenant
with their tax intermediaries or based on convenants
with their line of business
VLE / MLE: individual forward convenants
Developers of software: review of new products
Customs: Certificating
Conversations with tax directors
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Way through times of TA decisions are points of
attention; tax directors have to decide fast
Open attitude (the willingness to come to solutions)
is important
A one stop approach of TA is important for
enterprises
Open documentation rules create uncertainty
Change of focus
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Essential for the horizontal treatment strategy is the
understanding of the concerns and needs of the
businesses
Certainty for multinational enterprises is more
important than tax rates
Different approach in audits
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We don’t look for faults and mistakes
but
we ask the taxpayer to explain how he composes the
tax returns
• not only for the company income tax
but
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• for all tax heads
The faults and mistakes are useful to test the tax
control framework
Very large enterprises
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Forward compliance agreements (enforcement
convenants) on an individual basis
Ongoing deliberations with organizations of Tax
Intermediaries and Large Enterprises
Development of tax control framework as a part of the
business control framework based on ‘Simons’ and
COSO
Very large enterprises (continued)
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Tax Assurance Courses on the Business University
Nyenrode together with tax advisors, CEO’s and CFO’s
of VLE’s.
Intervision and training courses between regional offices
to stimulate staff rapidly growing in these issues
Masterclass training courses in negotiation and cooperation
Tax Control Frameworks (1)
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Letter of the Secretary of State of 9 juni 2006
“I would like to emphasise that the main basic
premise is that enforcement convenants are
concluded with businesses whose tax control
frameworks are solid, shaped by IFRS standards and
the USA SOX act.”
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Tax Control Frameworks (2)
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Principle based and not rule -based
Also attention for the soft controls
Intensity of supervision is based on the design,
existance and working of the TCF
Enforcement convenants VLE
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Agreement of the way and intensity of monitoring
All tax heads and collection
Within the laws, policy and jurisprudence
Rights and obligations remains unchanged
Kernal: mutual trust, understanding and
transparency
Contents of a convenant
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VLE: mentions the actual fiscal risks of certain
importance; gives facts and view on juridicial aspects
Personal domain of the parties
Tax inspector gives in time and clear information
about the position of the TA
Tailormate approach within the limits of the unity of
enforcement
It is legal to disagree and to start a lawsuit
Questions of the past are solved as part of the
convenant
Changes in work and thinking
Now:
Vertical supervision  distrust
The TA has to look or all the taxpayers has filled in
their
tax returns correctly
Intense job (wrong allocation of labour force)
Future:
Horizontal monitoring  trust
Lean on other supervisors (Public organizations,
Corporate Governance, other monitoring parties, etc.)
Distinction between compliant and non compliant
taxpayers
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Expected effects
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Effective en efficient
Fast and reliable certainty
Reducing administrative burden
Better settlement climate for enterprises
More attention from management for the business
processes and sustained understanding of ongoing
tax risks
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12. Workshop
1. Develop a vision / mission statement for your Large
Business unit
2. Identify the most important requirements needed to
successfully implement this mission statement
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