As revenue or tax collection has been cited as one of the high risk areas that are prone to leakage and mismanagement, revenue audit plays a very significant role in the field of public sector auditing. This includes tax audits as stated under Section 20, ISSAI 1 (The Lima Declaration): “SAIs shall be empowered to audit the collection of taxes as extensively as possible and, in doing so, to examine individual tax files. Besides that, it states that tax audits are primarily legality and regularity audits; however, when auditing the application of tax laws, SAIs shall also examine the system and efficiency of tax collection, the achievement of revenue targets and, if appropriate, shall propose improvements to the legislative body.”

However, auditors often find taxation to be one of the most challenging and complex fields to audit. This is mainly due to the complexity of tax/VAT/GST laws and its regulations. Such laws and regulations could not be made simple as it has other goals, including fairness, equity, efficiency, and enforceability. Inefficient and ineffective Revenue Collecting Agencies can have a huge impact on the fiscal policy of the government. Therefore, rigorous audits of revenue play an important role in assuring efficiency and effectiveness in revenue collection. Auditors have to be well prepared to identify weaknesses and assess the risks in revenue collection to ensure revenue that should have been collected, are collected and accounted for. Besides that, auditors need to identify and plug any instances of revenue leakages.

With limited auditing guidance materials available, there is a need for ASEANSAI to collaboratively address this issue to overcome the shortcomings and promote best practices in revenue audit. The ASEANSAI Revenue Audit Guidelines have been produced as a result of the ASEAN Supreme Audit Institutions (ASEANSAI) Focus Group Discussion (FGD) on revenue audit. With SAI Malaysia as the project leader, the guidelines were developed based on the discussions of seven ASEANSAI countries, namely Cambodia, Indonesia, Lao PDR, Malaysia, Philippines, Thailand and Vietnam.

 

ASEANSAI Guideline on Audit of Revenue