ISLAMABAD: The Federal Board of Revenue (FBR) will assign cases of income tax, sales tax, and federal excise duty to the third-party auditors for conducting audit of companies, Association of Persons (AoPs), and individuals for the Tax Year 2019.
Sources told Business Recorder, Monday, that the FBR required approval of the funding for third-party auditors to be engaged for conducting audit of cases of companies, AOPs, and individuals for the Tax Year 2019.
The FBR will select cases for audit through random balloting. The cases would be selected for audit through the Risk-Based Audit Management System (RAMS). Once funding is approved, the FBR will finally select the third-party auditors.
The FBR may select over 50,000 income tax cases for third-party audit of companies, AOPs, and individuals for the tax year 2019.
Under the Income Tax Ordinance, 2001, the board may appoint a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 to conduct an audit of the income tax affairs of any person or classes of persons, and the scope of such audit shall be as determined by the board or the commissioner on a case to case basis.
It has also been decided that the third-party auditors would be bound to abide by the confidentiality provision to ensure confidentiality of the data of the taxpayer selected for audit.
The confidentiality under Section 216(7) of the Income Tax Ordinance, 2001 would be ensured by the chartered accountant firms on the stamp papers as defined under the Chartered Accountant Ordinance, 1961 or a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966.
In order to ensure quality of audits, the third-party auditors would be divided into three different categories as per taxpayers declared turnover in their financial statements.
The FBR’s field formations including Inland Revenue Audit officers and other categories of officers would not be assigned audit cases this year. They would also not be allowed to issue notices to the cases being selected through random balloting.
Copyright Business Recorder, 2022