TOOLS TO CARRY OUT AN INSPECTION

It is a process through which we seek to verify that the tax bases declared by the taxpayer correspond to the real truth. In other words, it corresponds with the sworn statements that were carried out in the audited tax and also verify that the sworn statements comply with the law. These statements must comply with the regulations that govern the matter. To achieve this, audit techniques must be used that allow formal controls to be carried out to verify the externalization of the tax obligation and its due extinction in accordance with substantive standards. To achieve this, it must promote the ex officio determination procedure of all those issues that have been omitted when submitting the sworn statements corresponding to the calendar year and fiscal periods that are intended to be verified.

                                                                                                             Patricia A. Cozzo Villafañe[1]

SUMMARY: 1.-A Introduction mode.2. formal verification. 3.-Technical verification 4.-Objectives of the inspection. 5.- Stages of the tax audit. 6.-Audit tools and their importance. 7.- Affidavit. 8-Determination of office. 9.Limits of the auditor. 10.-Traditional tools 11.-Auditor activities. 12.-Different cases of website analysis. 13.-Economic analysis of the taxpayer. 14.-Ratio or index. 15.- Inventory rotation analysis. 16.-Analysis of the taxpayer's financial statements. 17.-Memory. 18.-Notes. 19.- Annexes. 20.- How to justify the balance in favor. 21-Analysis of the VAT sales book. 22. Conclusions. 23. Bibliography.

 

1.-A WAY OF INTRODUCTION

It is a process through which we seek to verify that the tax bases declared by the taxpayer correspond to the real truth. In other words, it corresponds with the sworn statements that were carried out in the audited tax and also verify that the sworn statements comply with the law. These statements must comply with the regulations that govern the matter. To achieve this, audit techniques must be used that allow formal controls to be carried out to verify the externalization of the tax obligation and its due extinction in accordance with substantive standards. To achieve this, it must promote the ex officio determination procedure of all those issues that have been omitted when submitting the sworn statements corresponding to the calendar year and fiscal periods that are intended to be verified.

For that we must first see what the FORMAL verification is and what the TECHNIQUE is.

2.-FORMAL VERIFICATION

It is aimed at verifying the correct compliance with the taxpayer's formal obligations with regard to the indirect tax on gross income. It is intended that they submit their sworn statements every month and that if there are balances in favor of the treasury, they are cancelled. For this purpose, arithmetic calculations are carried out, payment of the lien at the time of maturity or payment of the contractual interest, control of payment of the payment plans and facilities in the capacity of Collection Agent and also of other taxes and fees, including the stamp tax.

3-TECHNICAL VERIFICATION

It is the comprehensive audit of the taxpayer, which tends to verify substantive compliance with the obligations under its responsibility. Thus, the study of the principle of economic reality that arises from article 1 of law 11683 and article 27 of the Multilateral Agreement law becomes important. Through this, the correct definition of taxable events and their tax framework is verified through the calculation of the tax base and the amount of tax paid or that must be paid in the future.

4.-OBJECTIVE OF THE INSPECTION

The final objective of the inspection is to achieve the collection of taxes. But we must keep in mind that there are two types of inspection, one that is direct and the other that is indirect.

It is necessary that the audit has both forms and to achieve this objective the audit must have depth and speed and this is decisive in order to achieve the goal sought.

5.-STAGES OF THE FISCAL AUDIT

This has several stages and they are the following:

-Preliminary tasks before the start of the audit.

-Initiation and planning of the inspection.

- Execution of the inspection.

-Evaluation and final procedure.

6.-AUDIT TOOLS AND THEIR IMPORTANCE

It is necessary to have some tools and procedures that allow improving the time of inspections, achieving the required depth in controls, detecting errors and deviations or possible sources of evasion, facilitating the task of the inspectors and avoiding returns.

7.-SWORN DECLARATION

 The Argentine tax system is based on self-declaration, which has different consequences:

The reality that has been made up of economic facts that are known to the taxpayer.

The sworn statement must include elements that are necessary to know what the taxable event is and the amount.

The tax administrations have the power to verify and control whether the sworn declaration coincides with the economic reality that was audited and may determine the taxable matter.

8.-DETERMINATION OF OFFICE

There are two ways to proceed, one of them is on a certain basis with the elements supplied by the taxpayer and on a presumptive basis, which is when the elements are not supplied by the taxpayer or elements are contested.

In the latter case, it is based on presumptions and these are of different types:

SIMPLE When it takes into account the capital invested, the sales volume of previous years, profits from other fiscal periods, profits or expenses of other similar companies.

LEGAL: Fixed point, bank deposits, inventory differences, undeclared remuneration, unjustified capital increases, etc.

9.-LIMITS OF THE AUDITOR

When carrying out this task we are going to encounter two limits that are very important. One of them is access to information, which are the subjective tools available to the auditor:

One of them is knowledge of the company's activity, such as a party hall or a funeral home. For example, in the case of a funeral home, it is known that they must send a report to the Cemetery and if we start from that knowledge, it is asked how many cemeteries it works with and based on that it can be verified by collecting information from them.

Knowing how to adapt to the specific case since a neighborhood business and a multinational are not the same.

Good professional and technical training.

Information about the global, national, regional or sectoral economy.

The auditor's subjective tools

Possess investigative capacity and know how to reverse the burden of proof based on this knowledge. (Principle of innocence).

Ability to question and not be afraid of not understanding and dare to ask.

Know how to put yourself in the shoes of the auditee or taxpayer.

Know how to plan and go to the bone and not leave gray areas.

10.-TRADITIONAL TOOLS

Survey and review in order to document a certain procedure.

Compare and verify by comparing records and supporting documentation.

Compare the differences between the operations in light of usual practices.

Investigate trying to get statements carried out through notes.

Observation through ocular inspection of various operations.

Based on this analysis, what is the applicable legislation?

Search to reconcile by searching for two databases to match, such as ARBA and AFIP, for the purposes of determining the tax on gross income.

Analyze the accounting balances and bases and various accounting movements, the accounting majors.

Circularization of third parties: clients, suppliers and control bodies.

Follow the commercial circuit of an operation, which is called tracking.

11.-ACTIVITIES OF THE AUDITOR

He is authorized to request notes in the nature of a sworn statement, since we must assume that what is not included in the file does not exist. It must frame the inspection and controls. He must also request clarifications and extensions. Request supporting documentation.

When framing the audit, he must detail which properties are affected by the activity and what activity is being audited. Determine if these properties are owned or rented and in the latter case if the stamp tax on the contracts has been paid.

Determine the tasks and whether it is within the framework of the Multilateral Agreement.

What is the volume of employees and what are the fixed assets F-931 and the table of fixed assets.

It is necessary to read the corporate books carefully and carefully.

Observe whether the legal status is correctly accredited at the time of starting the audit and whether the differences must be taken into account and see if it is an economic group.

This allows us to make visible the volume of capital and whether the partners' decisions are transcribed.

A manufacturer of household appliances makes a loan to one of his partners with the purpose that his vice president creates a company of items similar to those that he sells the company and

12.-DIFFERENT CASES OF THE ANALYSIS OF THE WEB PAGE

We are a company and these are the brands that trust us. They are our main clients, which allows us to circulate and analyze the different contracts.

If we talk about those who promote by saying on their page "we are official representatives or our brands are, we are dealing with resale operations or manufacturing licenses, intermediation and contracts.

In the same way that if they say we are a group of companies, we are dealing with a business group.

13-ECONOMIC ANALYSIS OF THE TAXPAYER

There are internal and external users, namely:

There are four basic financial statements with more complementary ones.

There is an analysis of the taxpayer's financial statements that reflect the assets, liabilities and net worth.

They are exchange assets, notes, inventory rotation index, investments item and results.

On the other hand, there are the Banks where the control of balances and bank accreditations is carried out.

14.-RATIO OR INDEX

It is the division or relationship between two values in the financial statements that allows an evaluation of the different situations of the company.

15.-INVENTORY ROTATION ANALYSIS

  COST TURNOVER OF GOODS SOLD

                                      =

EXCHANGE ASSETS - AVERAGE STOCK

 

AVERAGE = INITIAL STOCK + FINAL STOCK

Stock 2

16.-ANALYSIS OF THE TAXPAYER'S FINANCIAL STATEMENTS

-Recurring losses and profits according to installed capacity.

- "Other income and expenses" heading

-Financial and holding income.

-Net in the "other income" and "sales" accounts

-Analysis of the gross profit margin on purchases

If an analysis is carried out by investment activities, an analysis of the accounts receivable ratio will be seen.

Average period

Average accounts receivable x 365 for collection = sales.

Average = Accounts receivable at beginning + accounts receivable at closing

Accounts receivable 2

The taxpayer's financial statements according to the auditor's reports

Readings of caveats.

17.-MEMORY

ASPO: import restrictions, dollar differential.

Activities other than those declared, new clients, increased sales

Conclusion of a contract with an important client.

In the case of a company providing services for a fee: the total number of clients at the end of 2021 reached 4,565,237, representing a net increase of 0.82% compared to 2020. This indicator was maintained for 5 years in a row. on the rise. Having the value of the minimum rate, the minimum level of sales can be calculated.

18.-NOTES

Employee trials with final judgment.

Exchange goods for industrial activity.

Case of employees with a final ruling: "There has been an unfavorable ruling due to a lawsuit initiated by a group of employees" Regarding salary differences, the income consumed and the sale omitted due to not having been declared must be taken into account.

19.-ANNEXES

Expense table, for sales commissions and production expenses.

Table of fixed assets (activity, real estate or automobile tax

CMV subsidiary purchasing crossing.

For the analysis of economic groups, taxpayers are sought by address

Control of current and major accounts.

Movements between companies.

Supporting documentation

Reversal of withholdings, bank withholdings and perceptions.

EFE Withholdings-Collections

Bank Withholdings-Sales.

Perceptions-Purchases in CMV Annex

20.-HOW TO JUSTIFY THE BALANCE IN FAVOR

Excess bank accreditations and excess purchases.

Analysis of production capacity. How to bring production to daily and hourly value. A purchase with what appears on the website. Comparison with ocular inspection. The website usually reports the productive capacity of a plant.

21.-ANALYSIS OF THE SALES VAT BOOK

Quantify credit notes

Sales by product and jurisdiction.

Official bulletin website

Analyze corporate modifications.

Change of authorities.

Search for bankrupt or bankrupt companies.

CONCLUSIONS

Both objective and subjective tools must be applied, developing a critical and investigative spirit. You have to focus on learning but proper planning must be carried out.

BIBLIOGRAPHY

Artana, D., Guardarucci, I., Lavigne, P., Puig, J., & Susmel, N. (2015). The Argentine Tax System: analysis and evaluation of proposals to reform it. Working Document 123, FIEL.

Cetrángolo, O., & Gómez Sabaini, J. C. (2009). Taxation in Argentina: an analysis of the taxation of income, assets and other taxes considered direct. ECLAC.

Corbacho, A., Fretes Cibils, V., & Lora, E. (2013). Collecting is not enough: Taxes as an instrument of development, Inter-American Development Bank

Gomez Sabaini J.C., Jiménez J.P., Martner R. (eds.). (2017). Consensus and conflicts in the tax policy of Latin America, ECLAC Books, No. 142, Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), 2017.

Gómez Sabaini, J. C., Jiménez, J. P., & Podesta, A. (2010). Taxation, evasion and equity in Latin America and the Caribbean. In: Evasion and equity in Latin America. Santiago: ECLAC, 2010. p. 11-67.

Gómez-Sabaini, J. C., & Jiménez, J. P. (2011). Tax structure and tax evasion in Latin America, CAF Working document No. 2011/08.

Gómez-Sabaini, J. C., and Moran D. (2016). Tax Evasion in Latin America: New and Old developments in the quantification of the phenomenon in the countries of the region, ECLAC

Hanni, M., Martner Fanta, R., & Podesta, A. (2015). The redistributive potential of taxation in Latin America. ECLAC Magazine, No. 116.

Morán, D., & Pecho, M. (2016). Taxation in Latin America in the last fifty years. Documents- Institute of Fiscal Studies, No. 18, pp.1-42.

OECD. (2016). Tax Statistics of Latin America and the Caribbean 1990-2015

OECD. (2017). Tax Statistics of Latin America and the Caribbean 2017.

Rossignolo, Dario (2015). Impacts on equity of changes in tax policy: Suggestions for reforms to improve the redistributive effects of the tax system in Argentina, Papeles de Trabajo, 9 (15), pp. 224-261. 2014

Tanzi, V., & Zee, H. H. (2001). Tax policy in developing countries. International Monetary Fund.

 

 

 

 

 

 

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[1] Dr. Patricia Cozzo Villafañe. Lawyer. She has a doctorate in Legal Sciences with a thesis in tax and economic criminal law. Specialist in Local Taxation from the University of Tres de Febrero. Postgraduate in Sub-national Taxation from the University of Tres de Febrero. Diploma in Public Policy Management. Postgraduate in Disability University of Buenos Aires. Trial lawyer in criminal matters. Official of the Collection Agency of the Province of Buenos Aires (ARBA). Lecturer. Author of articles on the specialty and author of books and Collective treatises. Olejnik Publishing House. Author of the book "Illicit Tax Association, moratoriums, money laundering, criminal policy and human rights" TED Editorial. ORCID: 0000-0002-2558-0051.