Tax Audit in Oromia Revenue Authority: Practices and Challenges

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Addis Ababa University


The major objective of this study was to assess the practices and challenges of tax audit in Oromia Revenue Authority. The study employed mixed research method where survey design and in-depth interviews were employed. Survey was conducted with selected taxpayers and tax auditors working at Oromia Revenue Authority. Actual sample size achieved was 213 (94.25%) for taxpayers' survey and 32 (96.97%) for tax auditors survey. In addition in-depth interviews were conducted with Deputy Head, Tax Audit Director and Tax Auditors Coordinator of Oromia Revenue Authority. Results of the study reveal that the practices to achieve ultimate Goals of Tax Audit was found at moderate level; Tax Auditors of the Office do not make sufficient efforts to create Taxpayers’ awareness; they usually focus on gathering and collecting information on health of the Tax system including compliance behavior of the Taxpayers, the Office did not proportionally focus on all types of Tax Audit techniques; most of the time Tax Audit activities were done without schedules, and carried out arbitrarily. Overall the practices of Tax audit at Head Office level of the Region was poorly practiced. The finding further indicated that, majority of Tax Auditors were assigned to their current jobs through internal transfer; the number of newly employed Tax Auditors accounts only 6.25% of all Tax Auditors; they did not attended training programs related to their current job during the past two years of their services at the Office. Yet, the results of this study revealed that, there is no well-established strategies that make Tax Auditors competent and efficient on their job through training on continuous bases. As a result, proficiency and competency level of Tax Auditors’ was found at moderate levels. Concerning challenges that influence the practices of Tax Audit; factors related with Traditions of Corruption, inflated estimation of tax amount; not responding the compliance of Taxpayers on time; Taxpayers consideration of illegal business practices as best way of doing business; and absences of coordinated efforts among sector offices of the region engaged on Tax audit related responsibilities were identified as the most sever challenges. Key recommendations of the study include: offering training; assigning competent Tax Auditors, integrating sector offices’ efforts, developing and using annual schedule of auditing for Taxpayers business firm, and arranging annual forum.


A Project report Submitted to Addis Ababa University, College of Business and Economics, Department of Accounting and Finance in Partial Fulfillment of the Requirements for Master of Science Degree in Accounting and Auditing


Tax, Tax Audit Practices, Tax Payer, Tax Audit Challenges