The Effectiveness of External Audit on Tax Collection in Ethiopia: Case of Large Tax Payers Office
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Date
2019-06
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Addis Ababa University
Abstract
This paper provides some evidences how the government benefited from the external
auditors effectiveness on tax collection by minimizing the loopholes which exposed
for tax avoidance, evasion and shelter. Research data collected from the population
auditing firms based in Addis Ababa and sample were taken from twenty firms
based on their size and number of employees. 100 questionnaires were distributed
to external auditors titled senior and above constructed by 5 point likert scale. 82
responses are obtained from the respondents and summarized by using excel spread
sheet before processed by STATA software to have descriptive and regression
analysis quantified results. The qualitative data from interview was used to
triangulate the respondents result from Stata. Eight hypotheses was proposed and
checked as a result competence, independence, regulatory body and tax audit have
significant effect and strong relation with the effectiveness of external auditors
performance on tax collection in comparing with audit firm size, audit fee and audit
tenure. In contrary awareness of tax by the external auditors inversely related. The
study recommended the governing body should work in co-operation with AABE,
finance professional association and individuals, there must be a comprehensive
tax manual used as a reference, a controlling mechanism should be set for external
audit professionals, the training and education department must be well arranged
and structured to provide support, AABE should to revise audit firm certification
criteria to increase the number of external audit firms and at last tax audit by the
tax authority preferably should be done as soon as tax report delivered by the tax
payers.
Description
Thesis submitted to the school of graduate studies of Addis Ababa university college of business and economics in partial fulfillment of the requirement for the degree of master of science in accounting and finance
Keywords
External Auditors, Tax Collection