During the audit each head of audit office must first monitor the execution of the audit to make sure that:
– Legal orientation of the audit meets the required levels;
– Audit is being conducted according to the approved program;
– Audit resources are being used effectively and efficiently;
– Audit is being conducted in compliance with the established standards and methodology;
– Audit is being conducted impartially and based on the principles of equal treatment for taxpayers with similar activities and in similar economic situations.
During this supervision the head of office requires information from office inspectors about the progress of the audit process and discusses with them about the most effective forms and methods to conduct the current audit, giving recommendations and receiving feedback. For important issues the head considers as deviations from the program or failure to apply the established standards and methodology or in case of erroneous legal orientation on the part of inspectors, the head of office immediately informs the head of section and Head of tax office in order to determine the necessary measures for the correct application of the law and officially advise the auditors.
The head of office may ask to be informed in writing. Such notice is given via intermediate reports and mainly applies to taxpayers with considerable volume of work, requiring a longer time for audit.
The head of office administers the evidence gathered from conducted audits in terms of sale prices per unit of goods or services, determining the flow level of goods or services the taxpayer belongs to the number of employees identified according to their job positions, minimum, average and maximum salaries explained according to the functions they perform and identifies the list of clients and suppliers with a flow value threshold per invoice. He stores this statistical database in order to use all these data as information to refer to in other audits of similar activities in the future.
Preparation of audit program by head of audit office
The accurate definition of the audit methodology and technique to be used in every case is one of the elements used for the preparation of audit programs.
The audit program is a technical program which serves as an internal instruction. It contains the principal guidelines for conducting the audit to a given taxpayer. Such program must comply with the risks and problems the taxpayer’s objectives involve, workload and type of audit to be conducted. The preparation of the audit program requires preparatory work by the head. This preparatory work has to do with the most recently updated information about:
– Suspension of VAT declarations;
– Declarations of insurance contributions with minimum values or zero;
– Requests for termination of activity or bankruptcy;
– Declarations of activity balance sheets with losses;
– Repeated cases of evasion;
– Newly registered taxpayers declaring a crediting VAT value for several successive months;
– Beneficiaries of tax or customs incentives for equipment or machinery with a low profit rate, etc.,
– Similar cases identified in the course of everyday audit practice.
Appointing auditors according to monthly plan inspection app
Appointing auditors for conducting an audit should not be a casual action. When appointing the auditors for a particular audit, the head of section should take into consideration a series of factors and circumstances which have to do with:
– Auditor’s professional ability: This includes the auditor’s professional and intellectual knowledge, skills, and capacity. The head should never place an audit in incompetent positions.
– Taxpayer’s nature and complexity: This includes the amount and volume of work as well as the complexity of the taxpayer. The bigger the volume of work and the complexity of the taxpayer, the more care should be taken when selecting auditors with special knowledge and skills for the area to be audited.
– Interpersonal relations condition the auditors’ team work. Auditing a large and complex taxpayer requires team work and good cooperation among inspectors in the course of the audit process. For various reasons it might very well occur that interpersonal relations between two or more auditors are not good. It is recommended that such inspectors should not be in the same team during an audit.
– The auditor’s former relations with the taxpayer and his/her staff. If in the course of previous audits there have been conflicts between the auditor and the taxpayer and his/her staff, it is not recommended to appoint that particular auditor to audit that particular taxpayer.
– Conflict of interest, which represents a situation or relationship of wealth or moral interest between the auditor and taxpayer, which can affect the auditor’s opinions. An audit conducted by an inspector involved in a conflict of interest should be cancelled. Such cancellation represents a financial as well as a moral loss for the audit sector. Therefore, this component should be given due and special attention.
Registration of audit time and result
It is indispensable to document the auditor’s working time not only in terms of how much time is spent, but also in terms of its destination and effectiveness of use, or in other words, in terms of its “product”.
The respective form reflecting the working time and the product is part of an auditor’s papers and at the end of the work it is signed by the inspector involved and deposited in the audit file. The form is individual and it is completed by every inspector, in spite of their working team. The registration of working time and its use (see form in Appendix to Manual) is completed by all inspectors and it includes not only the time spent during the audit, but also during the preparation of audit reports and documents, discussions with taxpayer or heads of audit, trips to taxpayer, interruptions of work for various reasons, etc.