ISLAMABAD: The Federal Board of Revenue will conduct large-scale audits including desk audits, investigative audits, forensic audits and field audits of the registered income taxpayers and sales taxpayers with the help of external auditors.
In this regard, the FBR has issued a detailed audit plan for the third-party auditors on Friday.
The new audit plan would be implemented in line with the FBR’s transformation plan.
FBR decides to conduct 3rd party audit of tracking services
According to a notification issued by the FBR, consequent upon approval of the FBR Inland Revenue (IR) transformation plan, Third-party auditors are being hired to improve the audit capacity and quality of FBR. In this regard, the Board has notified the job descriptions, key performance indicators, performance review forms, performance management mechanisms and performance management flow charts for the said auditors.
Through another notification, the FBR notified that consequent upon approval of the Federal Board of Revenue’s (FBR) Inland Revenue (IR) Transformation Plan, Audit Mentors & Industry Experts are being hired to improve the audit capacity and quality of the FBR.
In this regard, the Board has notified the job descriptions, key performance indicators, performance review forms, performance management mechanisms and performance management flow charts for the said Audit Mentors & Industry Experts.
As per the FBR, the Key Performance Indicators for Auditors revealed that 40 percent would be given for productively; 30 percent quality of audit and 30 percent has been assigned for behavioral (attention to detail, accountability/transparency and discipline).
As per the FBR audit plan, auditors will assist unit officer in conducting comprehensive desk audits, investigative audits, forensic audits and field audits to identify non-compliance, discrepancies and risk areas. Their role will involve preparing detailed audit reports and monitoring tax payments.
The responsibilities of the third-party auditors is to assist officers in conducting detailed desk audits to identify high-risk taxpayers for audit selection and investigation; assist unit officer to analyze taxpayer declarations and reconcile Income Tax, Sales Tax, Federal Excise, Customs, and CVT data to identify discrepancies, fraud, and compliance issues under relevant tax laws, SECP regulations and accounting standards.
The third-party auditors would also assist unit officer in conducting desk audits, investigative audits, forensic audits and field audits of Income Tax, Sales Tax, and Federal Excise affairs including examining tax returns, books of accounts, financial statements and annexures in compliance with IAS and IFRS standards and as per Companies Act, Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005 and relevant rules.
They would identify outliers in financial reports using financial ratios and use deviations from industry benchmarks as risk indicators for audit selection and comprehensively examine taxpayers audit history, compliance history, books of accounts, financial statements, vouchers, journals, ledgers, purchases, sales, production, stock reports and their correlation with production processes machinery and logistics.
The responsibilities of the third-party auditors is to assist unit officer to verify cost of sales, administrative expenses, selling expenses, financial charges and withholding taxes, verify trade creditors, trade debtors, bank statements, advances for shares and other balance sheet items.
They will examine brought-forward losses, tax reduction claims, tax credits, and verification of admitted, withheld and demanded tax payments.
They will assist unit officers in advance tax computation and preparation of exemption/reduced rate reports, conduct comprehensive chain analysis of buyers and suppliers to identify tax fraud cases and identify non-compliance with tax laws.
Audit officers will assist unit officer during visits to business premises to understand business processes, market shares, input-output prices and sales-purchase volumes for accurate Income Tax and Sales Tax Declarations.
Copyright Business Recorder, 2025
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