Directorate of Internal Audit in the wake of changed scenario Shahid Bashir Director Internal Audit (Direct Taxes) Central...
Introduction <ul><ul><li>Appointment of Directorate General of Internal Audit (Direct Taxes) is made under Section 228 of ...
<ul><li>The Directorate of Inspection & Internal Audit (Direct Taxes), Central Region, Lahore is headed by Director who is...
Organogram Director AD-I,Lhr AD-II,Lhr AD-III,Mn AD-IV GWl Asstt:Dir Circle-III Dy.Dir Circle-IV EAD, Circle-I Asstt: Dir:...
Broad Functions <ul><li>Functions: </li></ul><ul><li>To carry out inspections of income tax cases and offices. </li></ul><...
<ul><li>To carry out internal audit of cases or offices involving income tax revenues and expenditure </li></ul><ul><li>To...
<ul><li>All cases falling under the territorial jurisdiction of Large Taxpayers Unit, Lahore, Regional Tax Offices, Lahore...
Inspection <ul><li>Objective </li></ul><ul><li>Watch, examine and report fairly and impartially the occurrence of leakage ...
Contd… <ul><li>Ensure correct application of law and procedure. </li></ul><ul><li>Guide/assist the field formations in ord...
Areas of Inspection <ul><li>AUDIT DIVISION : </li></ul><ul><ul><li>Desk Audit </li></ul></ul><ul><ul><li>Audit of cases an...
Contd… <ul><li>ENFORCEMENT & COLLECTION DIVISION : </li></ul><ul><ul><li>Tax collection </li></ul></ul><ul><ul><li>Monitor...
Contd… <ul><ul><li>INFORMATION & PROCESSING DIVISION </li></ul></ul><ul><ul><ul><li>Data entry for other functional units,...
Contd… <ul><ul><li>LEGAL FUNCTION </li></ul></ul><ul><ul><ul><li>Maintenance and processing of record, adherence to time f...
Parameters for Selection of cases for Inspection <ul><ul><li>Desk Audit </li></ul></ul><ul><ul><li>Cases selected for audi...
Types of Inspection – Inspecting Authorities Additional Director Special Inspection 2 Additional Director Regular Inspecti...
Annual Schedule of Inspection <ul><li>Annual Schedule of Inspection is prepared and approved by Director </li></ul><ul><li...
Internal Audit (Revenues) <ul><li>Objectives </li></ul><ul><ul><li>Examine fairly, independently and impartially leakages ...
Areas of Internal Audit (Revenue) <ul><li>Misreporting, under reporting and over-reporting of Direct Taxes Collection. </l...
Contd…  <ul><li>Checking the accuracy of depreciation, other allowances and correctness of carry forward and adjustment of...
Contd… <ul><li>Detection of  wrong and time barred, rectification of mistakes and wrong issuance of refunds </li></ul><ul>...
Contd… <ul><li>Checking of Incorporation Certificates in case of transfer and receipt of arrear demand. </li></ul><ul><li>...
Constitution of Audit Party <ul><li>Deputy/Assistant/ </li></ul><ul><li>Extra Asstt: Director </li></ul><ul><li>Inspector ...
Annual Schedule of Internal Audit (Revenue) <ul><li>Annual Schedule of Internal Audit (R) is prepared and approved by the ...
Internal Audit (Expenditure) <ul><li>Internal Audit (Expenditure) is a new function assigned by the Board vide SRO No.660(...
Contd… <ul><li>Objectives </li></ul><ul><li>Conduct and report fair, independent and impartial audit of expenditures to en...
Constitution of the Team <ul><li>Additional Director </li></ul><ul><li>DD/AD/EAD </li></ul><ul><li>Inspector </li></ul><ul...
Schedule of  Internal Audit (Expenditure) <ul><li>Annual Schedule of Internal Audit (Exp) is prepared and approved by Dire...
<ul><li>The Director shall report to the DG the final compliance in the prescribed format verified and signed by the Add. ...
Special Assignments Given By The CBR To The Organization <ul><li>Desk Audit of returns  </li></ul><ul><li>Monitoring of Wi...
Desk Audit of returns <ul><li>Checking of admitted liability u/s 137 </li></ul><ul><li>Checking of advance tax liability u...
Desk Audit- Monitoring of Withholding Taxes <ul><li>Desk audit was conducted in respect of Withholding agents of </li></ul...
Inspection of Arrear demand transferred to Model Tax Payer Unit (MTU) Lahore <ul><li>This exercise yielded following resul...
  Contd…   <ul><ul><li>Demand not correctly entered. </li></ul></ul><ul><ul><li>Cases set-a-side by ITAT but assessment st...
Significant Achievements INTERNAL AUDIT (REVENUE) 597.867 777.604 E&C- -01,,Lhr. 7 713.237 894.063 E&C- -05, Lhr. 6 613.81...
Significant Achievements INTERNAL AUDIT (REVENUE) 291.349 318.643 E&C-09, Div-I 14 229.457 1010.613 E&C-07,Div-I 13 197.31...
Significant Achievements INSPECTION 12.900 Main After Ahmad. 9 10.115 Mian Iftikhar Ahmad. 8 5.238 M/s Qadri Brothers (Pvt...
Significant Achievements INSPECTION 11.231 M/s Crescent Board Ltd. 18 43.580 M/s Margalla Textile Mills Limited. 17 75.967...
Sanctioned/ Working Strength of Officers Vacancy Working  Strength Sanctioned strength BPS Post 1 - 1 16 Admn Officer - 5 ...
Sanctioned/ Working Strength of Officers 2 - 2 17/18 Deputy/Assistant Director. Vacancy Working  Strength Sanctioned stren...
This Directorate is facing acute shortage of  support  staff and this fact is evident from the following sanctioned streng...
This Directorate is facing acute shortage of support staff and this fact is evident from the following sanctioned strength...
This Directorate is facing acute shortage of support staff and this fact is evident from the following sanctioned strength...
Station- wise requirement of  Vehicles Required Available Station 6 1 - 5 8 Total Requirement:- 2 Gujranwala 2 Multan 4 La...
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Internal Audit- Synopsis

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Internal Audit- Synopsis

  1. 1. Directorate of Internal Audit in the wake of changed scenario Shahid Bashir Director Internal Audit (Direct Taxes) Central Region, Lahore
  2. 2. Introduction <ul><ul><li>Appointment of Directorate General of Internal Audit (Direct Taxes) is made under Section 228 of the Income Tax Ordinance,2001 </li></ul></ul><ul><ul><li>The role and functions of the Directorate General are provided in SRO No. 660 dated 30-06-2005 </li></ul></ul>
  3. 3. <ul><li>The Directorate of Inspection & Internal Audit (Direct Taxes), Central Region, Lahore is headed by Director who is assisted by 4 Additional Directors stationed at:- </li></ul><ul><ul><ul><ul><li>Lahore </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Multan </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Gujranwala. </li></ul></ul></ul></ul>
  4. 4. Organogram Director AD-I,Lhr AD-II,Lhr AD-III,Mn AD-IV GWl Asstt:Dir Circle-III Dy.Dir Circle-IV EAD, Circle-I Asstt: Dir: Circle-II Asstt: Dir Circle-V Asstt: Dir Circle-VI Asstt: Dir Circle-VII S.A. Admn Officer
  5. 5. Broad Functions <ul><li>Functions: </li></ul><ul><li>To carry out inspections of income tax cases and offices. </li></ul><ul><li>To investigate or cause investigation to be carried out in respect of cases involving leakage of revenue or evasion of taxes. </li></ul>
  6. 6. <ul><li>To carry out internal audit of cases or offices involving income tax revenues and expenditure </li></ul><ul><li>To furnish annual report about the working of Income Tax Offices. </li></ul><ul><li>To carry out any other work or function that may be assigned by the Federal Government. </li></ul>Contd…
  7. 7. <ul><li>All cases falling under the territorial jurisdiction of Large Taxpayers Unit, Lahore, Regional Tax Offices, Lahore, Multan, Gujranwala and Sialkot </li></ul>Jurisdiction
  8. 8. Inspection <ul><li>Objective </li></ul><ul><li>Watch, examine and report fairly and impartially the occurrence of leakage and loss of revenue. </li></ul><ul><li>Detect cases of incorrect determination of income and imposition of tax </li></ul>
  9. 9. Contd… <ul><li>Ensure correct application of law and procedure. </li></ul><ul><li>Guide/assist the field formations in order to improve the overall quality of work done by them and to build the image of FBR. </li></ul>
  10. 10. Areas of Inspection <ul><li>AUDIT DIVISION : </li></ul><ul><ul><li>Desk Audit </li></ul></ul><ul><ul><li>Audit of cases and amendment of assessment </li></ul></ul><ul><ul><li>Best judgment and provisional assessment </li></ul></ul>
  11. 11. Contd… <ul><li>ENFORCEMENT & COLLECTION DIVISION : </li></ul><ul><ul><li>Tax collection </li></ul></ul><ul><ul><li>Monitoring of with holding taxes </li></ul></ul><ul><ul><li>Issuance of refunds </li></ul></ul><ul><ul><li>Rectifications and appeal effects </li></ul></ul><ul><ul><li>Charge of additional tax and imposition of penalties </li></ul></ul><ul><ul><li>Issuance of exemption certificates. </li></ul></ul>
  12. 12. Contd… <ul><ul><li>INFORMATION & PROCESSING DIVISION </li></ul></ul><ul><ul><ul><li>Data entry for other functional units, Data Processing Centre (DPCs) and Pakistan Revenue Automation Ltd (PRAL) </li></ul></ul></ul><ul><ul><ul><li>Management of record and creation and maintenance of data base of taxpayers. </li></ul></ul></ul><ul><ul><ul><li>Receipt and processing of returns/statements and issuance of various notices under the Ordinance. </li></ul></ul></ul><ul><ul><ul><li>Receipt and dispatch of information and record from and to other Divisions </li></ul></ul></ul><ul><ul><ul><li>Analysis and dissemination of information of taxpayers </li></ul></ul></ul>
  13. 13. Contd… <ul><ul><li>LEGAL FUNCTION </li></ul></ul><ul><ul><ul><li>Maintenance and processing of record, adherence to time frame in follow up action relating to FTO matters, appeals before CIT(A), Appellate Tribunal, High Court and Supreme Court. </li></ul></ul></ul><ul><ul><ul><li>Alternate Dispute Resolution (ADR) matters. </li></ul></ul></ul><ul><ul><ul><li>Scrutiny of appellate orders. </li></ul></ul></ul>
  14. 14. Parameters for Selection of cases for Inspection <ul><ul><li>Desk Audit </li></ul></ul><ul><ul><li>Cases selected for audit/amended assessments </li></ul></ul><ul><ul><li>Refund cases </li></ul></ul><ul><ul><li>Exemption Certificates </li></ul></ul><ul><ul><li>Record relating to appeals </li></ul></ul><ul><ul><li>Record relating to Advance Tax u/s 147 </li></ul></ul><ul><ul><li>Important sectors/trades/professions etc. </li></ul></ul><ul><ul><li>Information available through print and electronic media </li></ul></ul>
  15. 15. Types of Inspection – Inspecting Authorities Additional Director Special Inspection 2 Additional Director Regular Inspection 1 Inspecting Authority Types of Inspection Sr. No
  16. 16. Annual Schedule of Inspection <ul><li>Annual Schedule of Inspection is prepared and approved by Director </li></ul><ul><li>Regular Inspection of different units of Functional Divisions in an LTU/RTO </li></ul><ul><li>The Inspecting Authority conducts monthly inspections according to approved schedule. </li></ul>
  17. 17. Internal Audit (Revenues) <ul><li>Objectives </li></ul><ul><ul><li>Examine fairly, independently and impartially leakages & loss of revenue </li></ul></ul><ul><ul><li>Guide, educate and assist the field formations on proper application of law, rules and regulations </li></ul></ul>
  18. 18. Areas of Internal Audit (Revenue) <ul><li>Misreporting, under reporting and over-reporting of Direct Taxes Collection. </li></ul><ul><li>Checking arithmetic accuracy of computation of income, expenditure, assets and liabilities. </li></ul><ul><li>Detection of miscalculation of tax credits, tax rebates and refunds. </li></ul><ul><li>Detection of wrong allowance of tax and improper application of tax rates </li></ul>
  19. 19. Contd… <ul><li>Checking the accuracy of depreciation, other allowances and correctness of carry forward and adjustment of losses. </li></ul><ul><li>Identifying improper deduction of Zakat, W.W.F., etc. </li></ul><ul><li>Pointing out mismanagement in field formations due to non-maintenance or improper maintenance of prescribed record. </li></ul>
  20. 20. Contd… <ul><li>Detection of wrong and time barred, rectification of mistakes and wrong issuance of refunds </li></ul><ul><li>Detection of fraudulent tax challans. </li></ul><ul><li>Pointing out lapses in monitoring of with holding taxes and enforcement of statements u/s 165 </li></ul>
  21. 21. Contd… <ul><li>Checking of Incorporation Certificates in case of transfer and receipt of arrear demand. </li></ul><ul><li>Checking the correctness of brought forward arrear demand, its addition and deletion. </li></ul><ul><li>Checking correct levy of additional taxes and penalties under the law. </li></ul>
  22. 22. Constitution of Audit Party <ul><li>Deputy/Assistant/ </li></ul><ul><li>Extra Asstt: Director </li></ul><ul><li>Inspector </li></ul><ul><li>Supervisor/UDC/ LDC </li></ul><ul><li>Head of Audit Party </li></ul><ul><li>Member </li></ul><ul><li>Member </li></ul>
  23. 23. Annual Schedule of Internal Audit (Revenue) <ul><li>Annual Schedule of Internal Audit (R) is prepared and approved by the Director </li></ul><ul><li>Internal Audit of each Functional Division in LTU/RTO is conducted at least once during a Financial Year. </li></ul><ul><li>The Audit Authority conducts monthly Audits according to approved schedule. </li></ul>
  24. 24. Internal Audit (Expenditure) <ul><li>Internal Audit (Expenditure) is a new function assigned by the Board vide SRO No.660(1)/2005 dated 30-06-2005. </li></ul><ul><li>Earlier Internal Audit of Expenditure was exclusively conducted by the Director General of Income Tax (External Audit) </li></ul>
  25. 25. Contd… <ul><li>Objectives </li></ul><ul><li>Conduct and report fair, independent and impartial audit of expenditures to enforce; </li></ul><ul><ul><ul><li>Proper maintenance of expenditure record </li></ul></ul></ul><ul><ul><ul><li>Check the arithmetic accuracy of the prescribed books of accounts, expenditure record and financial statements. </li></ul></ul></ul><ul><ul><ul><li>Detection and prevention of errors and mistakes through omission and commission in the accounts. </li></ul></ul></ul>
  26. 26. Constitution of the Team <ul><li>Additional Director </li></ul><ul><li>DD/AD/EAD </li></ul><ul><li>Inspector </li></ul><ul><li>Supervisor/UDC/LDC </li></ul><ul><li>Head </li></ul><ul><li>Member </li></ul><ul><li>Member </li></ul><ul><li>Member </li></ul>
  27. 27. Schedule of Internal Audit (Expenditure) <ul><li>Annual Schedule of Internal Audit (Exp) is prepared and approved by Director </li></ul><ul><li>Internal Audit of each Functional Division in an LTU/RTO is conducted at least once during a Financial Year </li></ul><ul><li>The Audit Authority conduct monthly Internal Audit (Exp) according to approved schedule. </li></ul>
  28. 28. <ul><li>The Director shall report to the DG the final compliance in the prescribed format verified and signed by the Add. Director </li></ul><ul><li>This shall be in no case later than 60 days from the date of delivery of the Inspection & Internal Audit Reports. </li></ul>Contd…
  29. 29. Special Assignments Given By The CBR To The Organization <ul><li>Desk Audit of returns </li></ul><ul><li>Monitoring of Withholding Taxes </li></ul><ul><li>Audit of Arrear demand transferred to Model Tax Payer Unit (MTU) Lahore </li></ul><ul><li>Special Inspection of Refund cases. </li></ul>
  30. 30. Desk Audit of returns <ul><li>Checking of admitted liability u/s 137 </li></ul><ul><li>Checking of advance tax liability u/ 147 </li></ul><ul><li>Propose imposition of additional taxes in case of default </li></ul><ul><li>Desk Audit of large Tax Payer Unit Lahore was conducted pointing out loss to the tune of Rs:155.392 million so far </li></ul>
  31. 31. Desk Audit- Monitoring of Withholding Taxes <ul><li>Desk audit was conducted in respect of Withholding agents of </li></ul><ul><ul><li>Banks </li></ul></ul><ul><ul><li>Corporate sector </li></ul></ul><ul><ul><li>Non corporate sector </li></ul></ul><ul><li>Study report was prepared highlighting the agents not fulfilling their statutory obligations regarding filing of statements </li></ul>
  32. 32. Inspection of Arrear demand transferred to Model Tax Payer Unit (MTU) Lahore <ul><li>This exercise yielded following results: </li></ul><ul><ul><li>Demand notices not available on record. </li></ul></ul><ul><ul><li>Assessment Orders & I.T.30 Not available on record. </li></ul></ul><ul><ul><li>Assessment Order not served upon the tax payers </li></ul></ul><ul><ul><li>No recovery proceedings after appeal effect. </li></ul></ul><ul><ul><li>Arrear Transferred but incorporation certificate not obtained. </li></ul></ul>
  33. 33. Contd… <ul><ul><li>Demand not correctly entered. </li></ul></ul><ul><ul><li>Cases set-a-side by ITAT but assessment still pending. </li></ul></ul><ul><ul><li>Assessment record not matching with the entries mentioned in the arrear list. </li></ul></ul>
  34. 34. Significant Achievements INTERNAL AUDIT (REVENUE) 597.867 777.604 E&C- -01,,Lhr. 7 713.237 894.063 E&C- -05, Lhr. 6 613.813 896.446 E&C- 14, Lhr. 5 1039.993 1481.023 E&C--06, Lhr. 4 3384.696 3384.696 E&C-02, Lhr 3 839.582 857.416 E&C- 12, Lhr 2 9008.832 9008.832 E&C-02, Lhr. 1 Loss retrieved (M) Loss reported (M) Office Audited S #
  35. 35. Significant Achievements INTERNAL AUDIT (REVENUE) 291.349 318.643 E&C-09, Div-I 14 229.457 1010.613 E&C-07,Div-I 13 197.311 424.166 E&C 14,Div-I 12 942.921 1121.787 E&C-03, Lhr. 11 59.692 1579.124 LTU,Lahore. 10 2916.883 3955.597 E&C-02, Lhr. 9 764.445 800.333 MTU, Lahore 8 Loss retrieved (M) Loss reported (M) Office Audited S #
  36. 36. Significant Achievements INSPECTION 12.900 Main After Ahmad. 9 10.115 Mian Iftikhar Ahmad. 8 5.238 M/s Qadri Brothers (Pvt) Limited. 7 16.892 M/s Farooq Habib Textille Mills Ltd. 6 5.798 M/s Suhail Travels (Pvt) Ltd,Multan. 5 7.283 M/s Coca Cola Export Corporation Ltd. 4 4.445 M/s Bundu Khan Restaurant,Lahore. 3 9.453 M/s First Jamia Services (Pvt) Ltd. 2. 14.067 M/s Akram Medical Complex,Lahore. 1 Loss retrieved (M) Name of assessee S.No.
  37. 37. Significant Achievements INSPECTION 11.231 M/s Crescent Board Ltd. 18 43.580 M/s Margalla Textile Mills Limited. 17 75.967 M/s Allama Textile Mills Ltd. 16 11.465 M/s Sargodha Industrial Urban Development Cooperative Society. 15 7.271 M/s Kings Tyres (Pvt) Limited. 14 17.092 M/s Nicon Centre of Computer Science. 13 5.389 M/s Ammar Medical Complex (Pvt) Ltd. 12 21.191 M/s Lahore Grammer School (Pvt) Ltd. 11 9.126 M/s Crescent Board Limited,Lahore. 10 Loss retrieved (M) Name of assessee S.No.
  38. 38. Sanctioned/ Working Strength of Officers Vacancy Working Strength Sanctioned strength BPS Post 1 - 1 16 Admn Officer - 5 5 16/17/ 18 S.A./Deputy/Asstt: Directors - 2 2 19 Additional Director - 1 1 20 Director Lahore
  39. 39. Sanctioned/ Working Strength of Officers 2 - 2 17/18 Deputy/Assistant Director. Vacancy Working Strength Sanctioned strength BPS Post - 1 1 19 Additional Director Gujranwala - 1 1 17/18 Deputy/Assistant Director 1 - 1 19 Additional Director Multan
  40. 40. This Directorate is facing acute shortage of support staff and this fact is evident from the following sanctioned strength 5 1 6 Naib Qasid - - - Driver. 3 1 4 U.D.C. 8 2 10 Inspector 1 - 1 Steno typist Difference: New Strength Old Strength Designation Multan
  41. 41. This Directorate is facing acute shortage of support staff and this fact is evident from the following sanctioned strength - 1 1 Driver 1 - 1 Daftri 3 6 9 LDC 5 - 5 Steno typist 1 2 3 Stenographer Difference: New Strength Old Strength Designation Lahore
  42. 42. This Directorate is facing acute shortage of support staff and this fact is evident from the following sanctioned strength 1 - 1 Daftri - - - Driver - - - UDC/LDC 5 1 6 Inspector 2 - 2 Steno typist 1 - 1 Stenographer Difference: New Strength Old Strength Designation Gujranwala
  43. 43. Station- wise requirement of Vehicles Required Available Station 6 1 - 5 8 Total Requirement:- 2 Gujranwala 2 Multan 4 Lahore
  44. 44. Thank You

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