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Syllabus: CICTA 303
SYLLABUS CICTA 303 - COURSE: TAX AUDIT AND INVESTIGATION - Certificate Level
20.0 Course Objective
The course is structured to assist the Tax office in examining the impact on profit due to misstatements and errors which may lead to tax avoidance and tax evasion. It is to ascertain whether profit has been understated as a result of any error of intent, commission or omission to the advantage of the tax payer, or sometimes to ascertain the equitable tax or refund payable.
20.2 Course Description
The course covers the investigation of all the variables in the income statement, the balance sheet and the cash flow statement. The major attention shall be drawn on risky areas particularly act of omission or commission leading to overstatements of administrative expenses and overstatement of cost of sales and their resultant effect on the income statement and the balance sheet. The Notes to the accounts, Chairman Statement etc. are among the references in this module.
20.3.1 Background and Concept of Tax Audit
* The concept of tax audit and tax compliance
* The growth of tax revenue after audit.
* The underlying tax audit philosophy of profit maximization and risk minimization
20.3.2 The Nature, Purpose and Scope of Tax Audit
* Tax audit and investigation covers at the first stage, Receipts & Vouchers, the primary books of accounts cash flow, etc.
* The Examination of the ledgers, control accounts and the trial balance
* Tax examination of the income statements particularly salient variables e.g. the closing stock
* Tax examination of the balance sheet particularly the current assets, current liabilities and the working capital, to check liquidity risk.
20.3.3 Differentiation between the Internal Auditor, External Auditor and Tax Auditor
* The functions of the internal auditor, external auditor and the tax auditor.
* The collaborative functions of the internal and the external auditor.
20.3.4 The Independence of the Tax Auditor
* The appointment and responsibility of the tax auditor
20.3.5 The Elements of Objectivity, Truth and Fairness In Tax Audit
* Truth and fairness of the net profit or loss
* The derivative of the tax profit as against accounting profit
20.3.6 Types of Tax Audit e.g. Forensic Audit
* The issue of forensic audit, legal issues and the role of the tax auditor
20.3.7 Scope of Tax Auditing vis-a-vis Revenue Agencies.
* The investigative component of tax auditing and legislations. Input / output tax form and other direct and indirect tax legislations
* The conflict between Tax auditor?s reports and management.
* Third parties report and tax auditing.
* The scope of audit practices and procedures
20.3.8 The Investigative Process of Examining Employment Income, Business Income, Investment Income and Income from Vocations
* Employment income investigations - PAYE, pensions, benefits in kind and in cash, resident and non-resident employment income
* Business income investigations
* The issue of transfer pricing vis a vis consolidated accounts and company accounts
* Capital allowance as a tax relief - examination of assets register and the cash flow statement
* Tax examination of business takeovers, amalgamations, reconstruction, and general disposals.
20.3.9 The Elements of Audit Risk
* The impact of audit risk and net profit
* Tax examination of the accounting profit and tax profit
* Tax examination of the general administrative expenses in relation to the net profit and the balance sheet.
* Tax auditors report and audit review
* Preparation of Tax Auditors report and the financial statement
* Qualified and Unqualified opinion of the tax auditor.
* Limitations and threat of the tax auditor
* The Tax Auditors evidence and Audit Risk
* The elements of Fraud and Error as related to audit risk