BIR tax audit system gets high-tech boost

TAX collection is the lifeblood of any economy. To be efficient in collecting taxes, one of the components is a modern auditing system that can track effectively the transactions between the government and the taxpayer. With its limited resources, it has become a challenge for the government to modernize the Bureau of Internal Revenue (BIR)’s information communications technology infrastructure. Fortunately, the BIR got a very big helping hand from the Millennium Challenge Corp. (MCC) which granted the agency financial assistance to modernize its tax auditing system through the Computer Automated Auditing Tools and Techniques (CAATTs).
In a recent interview, Millennium Challenge Corp. Philippines president and chief executive officer Maria Victoria Añonuevo said the BIR was provided with assistance to enhance its tax collection system.

To maximize the impact of the CAATTs, the former Ayala Land Inc. executive said the project will zero in on the country’s largest taxpayers because this would create a big impact on the government’s revenue generation program. “To make the tax system procedures more efficient for this special group of taxpayers, they are mandated to file their tax procedures electronically,” said Añonuevo.

“It would also provide revenue officers and taxpayers the tools on how to implement minimum standards and procedures towards systematic auditing,” she added.

Marietta Lorenzo, BIR assistant commissioner for project management and information service, said the introduction of the CAATTs would shorten the turnaround time of the audit process.

Unlike in the old system, she said CAATTs would enable the examiners to check on the voluminous data of taxpayers and capture the important information in a short span of time.

Joseph Christian Santos, project manager of CAATTs, said there was “significant improvement” in the actual implementation in 2009 specifically in the collectibles of the agency.

“The other goal of the project is to make the BIR at par with the major accounting firms in their turnaround time,” he said.

“Now that we have the tools, we’re hoping to reach that goal as required by the BIR. That means we have to finish the processing from one to 20 days,” he said.

If the taxpayers know that the agency’s auditing is well-equipped, Santos said taxpayers would be now accurate with their data. “The CAATTs would create a level playing field for the BIR and the taxpayers as well.

Santos said CAATTs enabled the BIR to evaluate and investigate computerized data of large taxpayers in a faster and more accurate manner.

With large volume of data from the accounts of large taxpayers, he said a computerized system like CAATTs would be a big boost in processing the data.

He added that it will be easier for the BIR to mine the data because majority of the private companies also use CAATTs.

Lorenzo said the CAATTs would be considered the financial forensics because this can also address issues on transfer pricing.

To develop a substantial pool of CAATTs experts, Santos said the BIR would train 30 personnel on the program. After they have finished the training, the 30 participants would train the other staff from the different branches of the agency.

Santos said one of the top features of the ACL is the audit trail capability. This means inputs made by the revenue officer are recorded in the system. “Once these are recorded, you cannot delete the data,” he said.

Since the filing is done online, Lorenzo said CAATTs has minimized the face-to-face interaction between the revenue officer and the taxpayer.

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