Tax Audit and Tax Control: Interaction Model and Legislative Regulation

Abstract

Calculations for taxes and payments are one of the key areas of accounting and the object of tax control and audit at any enterprise. The interaction of tax inspectors and auditors and their relations with tax-paying enterprises within the framework of their inspection are insufficiently regulated by law. The article is devoted to disclosing the procedures and features of the legislative regulation of tax audit in the system of interaction of taxpayers, control bodies and audit companies. To emphasize the existing features of tax audit carried out by independent audit firms and tax audit carried out by fiscal authorities, the authors use two definitions: tax audit and tax control. Taking into account the differences between the tax audit and tax control, it is recommended to legislate the concept of tax audit and tax consulting services at the level of normative legal acts in the field of audit activity. Based on the data of the conducted survey of accountants, the reasons for fines and VAT surcharges were revealed. The model of the relationship between taxpayers, subjects of audit activity and tax authorities is substantiated and described. Applying this model will increase the quality of independent audit and tax control and the trust of stakeholders in the financial and tax reporting of enterprises. In addition, it will reduce the financial risks to taxpayers and society's costs for maintaining the tax control system. Within the framework of this model, under certain circumstances, tax authorities can get acquainted with the results of audits by independent auditors drawn up in a separate document in the part of tax calculations. Quality control of an independent tax audit can be carried out by the Body of Public Supervision of Auditing Activities or the Audit Chamber of Ukraine within the framework of general quality control of audit services and indirectly by tax authorities during a tax control. Accordingly, the interaction between these subjects can create additional opportunities to strengthen the quality control of auditing activities as a whole.

Tax Audit to Ensure Business Prosperity: Trends and Perspectives

“…These studies have highlighted the importance of robust internal control systems and proper documentation to ensure tax compliance. However, our results add novelty to the existing body of knowledge by taking a broader perspective on the topic and supplementing the previous ones, including our research [20][21][22][23][24][25][26][27][28][29][30][31][32].…”

“…In addition, tax audit issues were the object of research by such scientists as G. Lietz [16], T. Rostain [17], M. Hanlon, et al [18], N. Ahmad et al [19], J. Robinson et al [20], M. Steller, E. Pummerer [21], R. T. Ainsworth [22], 23. Müller, W., Kuznetsova, A., Khrystoforova, O., Karpachova О., & Sulyma, M. [23], C. Lennox et al [24], M. Shyhun, A. Zhuravel [25], A. Darono, A. Pratama [26], and others [27][28][29]. Without diminishing the contribution of scientists to the development of the theory and methodology of audit, taking into account the need for time management information, it should be noted that the general methodology of the audit of taxation of the business services industry is relevant.…”

Tax Audit in the Conditions of Digitalization: Current State, Problems, Perspectives

“…In his writings, L. Chudak analyzed the work of the State Fiscal Service and its territorial bodies regarding tax audits on issues of compliance with tax, customs, and other legislation and substantiated directions for improving the effectiveness of control and audit measures [22]. The works of M. Shigun and A. Zhuravel are devoted to determining the content of the procedures and features of the legislative regulation of tax audit in the system of interaction between taxpayers, control bodies, and audit companies [24]. In her writings, A. Zinkevich investigated the relevant aspects of legislative regulation and methodical provision of tax audits at the enterprise [8] and substantiated the procedures and stages of tax and payment audits using a survey of the enterprise's employees [9].…”