CIAT Thematic Tax Series
In each case of risk, efforts should be made to cover the risk by means of the most effective and efficient form of treatment. Preferably a treatment programme that is geared to the risk will support the tax officer.
Evaluation Evaluation and feedback are essential elements of the risk management process. Evaluation is necessary in order to learn from the process and to increase its accuracy. Evaluation makes it possible to refine the process model, and to achieve greater efficiency. The feedback of any results and conclusions from the evaluation process provides an important input for the Tax Administration’s decision making. It is therefore necessary to evaluate not only each individual step but also the process as a whole. The feedback will have a two-fold impact: -
Firstly, it will provide information with regard to decisions on auditing strategy, and auditing policy and auditing plans, and to the overall planning of operational auditing activities. It will also be an essential tool for the allocation of human and technical resources.
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Secondly, the results will have a direct impact on the model itself. As the evaluation needs to cover all steps, as well as the process as a whole, the outcome could directly be translated into decisions, which reinforce the various steps, as well as the process as such. If tax auditing is principally based upon risk analysis, it will be of the utmost importance to regularly evaluate the model and its outcome.
Next to the information of the examination of signaled risks, information of random examinations (examinations without a special reason) can give additional feedback. The random examinations can give information of non-identified risks.
Treatment strategy translated in forms of treatment There is an interrelationship between the risk management process and the treatment strategy. The treatment strategy reflects the degree of attention, the form and the intensity of the treatment. Such aspects as the available capacity and the level of training and development of the employees determine the degree, in which the treatment strategy, as it has established, will indeed be implemented in practice. On the basis of the treatment strategy selected, various forms of treatment can be applied. The elaboration of the treatment strategy is based upon the enforcement pyramid, which includes all treatment forms from providing assistance to taxpayers at the bottom to detection, criminal investigation at the top. To main flows of activities can be distinguished: proactive activities/up-to-the-present activities and testing/reactive activities. Proactive treatment forms are actively N°. 1 - August 2008
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