ICAN ADVANCE TAXATION WEEK THREE QUESTIONS TOPIC: TAX AUDIT AND INVESTIGATION Watch the video lecture chapter 12 before attempting any of the above questions in order to have a clear understanding of the requirements of the questions REVIEW QUESTIONS QUESTION 1 (a) Tax Audit and Tax Investigation are two terms usually used interchangeably. You are required to distinguish between these two terms with respect to their meaning and their objectives. (b) Briefly explain the following: i. Audit checklist ii. Desk audit iii. Interim audit report STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 1
iv. Field audit QUESTION 2 (a) What are the conditions in which tax investigation can be terminated.(10 Marks) auditor. (b) i. ii. What is audit programme? State benefits to be derived from the tax audit programme by tax QUESTION 3 (a) The essence of Tax Audit and investigation is to enable the tax officials to verify information contained in the file returns by a taxpayer. Briefly discuss the types of Tax Audit known to you. (b) State the factors to consider by a Tax official when selecting taxpayers for tax audit. QUESTION 4 The Managing Director of Kaduna Limited, a trading Company registered with the Federal Inland Revenue Service, just received a letter from the Area Tax Controller, Integrated Tax Office, Lagos. STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 2
The letter was passed to you for expert advice and guidance, in your capacity as the Company s new Tax Consultant. You later discovered that Kaduna Limited s Accountant has been in charge of the Company s tax matters without input from any professional Tax Consultant. An extract of the letter from the Federal Inland Revenue Service reads thus: The Managing Director Kaduna Limited Kaduna Way Lagos Dear Sir, KADUNA LIMITED RE: TAX AUDIT EXERCISE FOR 2009 AND 2010 ACCOUNTS I write to inform you that the Lagos Integrated Tax Office Audit team will be visiting your Company for routine tax audit exercise. The audit is scheduled to hold from 16 December to 20 December 2011 STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 3
You are requested to provide relevant documents and schedules in respect of the Company s tax and VAT returns and also co-operate with the Audit team to ensure a hitch free exercise. Yours truly, Signed Mr. Rufus Abanikanda As the company s Tax Consultant you are required to: (a) Explain the purpose of a Tax Audit. (b) Distinguish between Desk Audit and Field Audit. (c) Provide adequate checklist of documents and information to be made available of the Tax in respect QUESTION 5: As a consequence of the cashflow problems experienced by most state governments in Nigeria, most of them have secured the services of tax consultants to carry out back duty and tax investigations. This has increased the returns into the coffers of the various state governments just as it has necessitated filing of notices of appeal and appearances before the Tax Appeal Tribunal. Required: Explain the following: (a) Back duty and tax investigation STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 4
(b) Investigatory power (c) Search and seizure QUESTION 6: List the stages in a typical tax audit process. QUESTION 7: Tax audit is conducted for the purpose of ensuring that a taxpayer has conducted his affairs in accordance with the tax laws and practice. Required: Explain the following regarding the tax audit of the Revenue: (a) Objectives of a tax audit (b) Selection of tax payers for audit. Hello professional students, in case you need any explanation or clarification on any of the above Questions, you can call me on 08114440096. I wish you best of luck Regards: Johnson J.O. (dee-catalyst) STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 5
Taxation Lecturer 08114440096 STARRY GOLD ACADEMY +2348023428420, +2347038174484, info@starrygoldacademy.com, www.starrygoldacademy.com Page 6