The Annual Meeting of the Representatives of
the Nordic and Baltic SAI’s
Lithuania, Vilnius, September, 2004
WORKING GROUP
REVENUE AUDIT
JOINT/ SIMULTANEOUS AUDITING OF STATE
REVENUE / COOPERATION BETWEEN TAX
ADMINISTRATORS IN THE FIELD OF COMBATING
VALUE ADDED TAX FRAUD
Presentation of A. Juozulynas, the NAO of Lithuania
From Draft Resolution on Good Co-operation
Practice Guide (2004) prepared by Joint Working
Group on Audit Activities of SAI’s of the Central and
Eastern European Countries, Cyprus, Malta, Turkey.
● Recognition of the usefulness of joint audits as a
way of developing and implementing new audit
methods and techniques and the value of smallscale, concrete co-operation on specific audit
activities
EXTERNAL FORCES FOR
JOINT/SIMULTANEOUS AUDIT
• EU enlargement, new forms of VAT fraud
• Globalization
• Fiscal implications (loss of significant state
revenue)
• Need to improve public governance
INTERNAL FORCES FOR JOINT/
SIMULTANEOUS AUDIT
• Need to strengthen capacity and
professional development of SAI’s
• Need to share skills and experience
• Need to recognize and learn from the
different audit methods in other SAI’s
PROPOSED CASE
COOPERATION BETWEEN TAX
ADMINISTRATORS IN THE FIELD OF
COMBATING VALUE ADDED TAX FRAUD
Affected by:
- EU enlargement
- New types of taxation
- New types of fraud,
VAT FRAUD IN INTRA-COMMUNITY TRADE
What’s new in the area of VAT from
perspective of new Member states:
VAT is not paid on importation to the
Treasury. The importer puts the input VAT
and the output VAT in VAT return.
VAT FRAUD SCHEME IN INTRA-COMMUNITY
TRADE
EXTEND OF VAT FRAUD
- TAX LOSSES
• Up to 10 % of VAT revenue
• In terms of Lithuanian Budget it would be 110
millions euro a year
• In some Member states it would be up to 12
billion euro
• Increasing tendency
CONTRA-MEASURES
USED BY TAX AUTHORITIES INTERNATIONALY
■ Cooperation between Member states
■ Exchange of information:
-Direct contacts
-Request for administrative enquires
-Fast exchange of basic information on
request (per fax)
-Automatic exchange of information on
missing traders
CONTRA-MEASURES
USED BY TAX AUTHORITIES INTERNATIONALY
■ Cooperation between member states
■ Exchange of information:
-Direct contacts
-Request for administrative enquires
-Fast exchange of basic information on
request (per fax)
-Automatic exchange of information on
missing traders
TIME DISCREPENCY
VAT refund after 1 moth
Information after 3 months
INTENSITY
• Statistical data of first half of 2004 Lithuania:
- 42 % of VAT receipts are refunded back or
transferred to cover other tax liabilities – 385
million euro a half year
- 85 thousand requests to pay back VAT excess or
trasfer it to other taxes
JOINT AUDIT VERSUS
SIMULTANEOUS AUDIT
Joint audit – where key decisions are shared,
work is done by one audit team and one
report is prepared for presentation to each
respective Parliament or governing body
Simultaneous audit – an audit where key
decisions are shared, work is done by
national audit teams and national reports
are prepared for presentation to national
respective Parliament or governing body by
national teams
A SUCCESSFUL JOINT/
SIMULTANEOUS AUDIT - 1
• To select an audit area of substance and
importance.
• To develop together clear, measurable and
achievable project objectives and plans for
the audit activity, based on a shared
understanding.
• Try and select an audit that has a high
degree of good likely results.
A SUCCESSFUL JOINT/
SIMULTANEOUS AUDIT - 2
• As possible to use external expert (s) with
considerable experience of joint/
simultaneous audit and technical
assistance in reviewing progress audit
• To hold internal workshops to provide
regular feedback at key stages
of audit (Planning, Fieldwork,
Review, Reporting)
A SUCCESSFUL JOINT/
SIMULTANEOUS AUDIT – 3
• The role and function of the audit team
should be clear and well understood from
start by all involved in the activity
• Communication within the audit team should
be effective and regular and the approach
should be sufficiently flexible to take on board
any modification needed
RESULTS
OF JOINT/ SIMULTANEOUS AUDIT - 1
• Strengthening the capacity and
professional development of SAI’s
• Sharing of skills and experience
• Passing to new external environment (EU
enlargement, new forms of VAT fraud,
globalization)
RESULTS
OF JOINT/ SIMULTANEOUS AUDIT - 2
• Information which is obtained in such
joint activity would not normally be
available in the course of purely
domestic audit, and can provide
additional assurance that SAI’s are
performing their duties in an effective
and wise way.
RESULTS
OF JOINT/ SIMULTANEOUS AUDIT - 3
• Support of improvement of public
governance
• Value Added: fiscal implication (gain of
state revenue)
RESULTS
OF JOINT/ SIMULTANEOUS AUDIT - 4
• Joint/ simultaneous audit –a rare
opportunity for the SAI to demonstrate
clearly the changes being made and the
added value and contribution they
make to the stakeholders
• Reporting toThe Baltic Assembly
RECOMMENDATIONS OF THE
WORKING GROUP-1
1. To mandate joint/ simultaneous audit in the field of
combating VAT fraud and mutual cooperation in
taxation matters – now
2. To form a preparation team – during 1 month
3. To mandate the preparation team to set up audit
objectives, methods, plan and terms – until the next
Annual Meeting of the Representatives of the Nordic
and Baltic SAI’s 2005
4. To confirm audit objectives, methods, plan and
terms – during the next Annual Meeting of the
Representatives of the Nordic and Baltic SAI’s 2005
RECOMMENDATIONS OF THE
WORKING GROUP -2
5. To execute audit – until the Annual Meeting of
the Representatives of the Nordic and Baltic
SAI’s 2006
6. To present audit report and audit results to the
Annual Meeting of the Representatives
of the Nordic and Baltic SAI’s 2006
7. To present audit report and audit
results to Parliaments of countries
– until the end 2006
THANKS FOR ATTENTION AND
SUCCESSFUL STARTS