Tax Audit in Oromia Revenue Authority: Practices and Challenges
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Date
2018-01
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Addis Ababa University
Abstract
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.
Description
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
Keywords
Tax, Tax Audit Practices, Tax Payer, Tax Audit Challenges