Appendix: Our 2003 recommendations

Recommendation 1
The IRD’s strategy for taxpayer audit needs to be further developed to provide information and proposals to address the issues we have highlighted – in particular:

• improving the focus and conduct of audits;
• strengthening capability; and
• measuring and reporting performance.

Recommendation 2
Implementation of best practice should be improved through:

• having all good ideas routinely shared – being encouraged as a “good thing”, and recognised in individual staff performance agreements; and
• reviewing information availability and requirements – so that information held in one part of the IRD reaches other parts of the organisation that need it.

Recommendation 3
The IRD should identify the case management requirements of taxpayer audit, and purchase and/or create tools to meet these requirements.

Recommendation 4
The IRD should draw up a standard audit induction programme for new investigators. The performance management system should be systematically used to assess training needs, and to design an ongoing training programme for investigators containing modules that can be linked to individual investigators’ requirements, performance management, and career progression.

Recommendation 5
The IRD should review its technology strategy – including the range of tools required – so that the principles identified in the audit strategy are implemented as a priority. The review should clarify the inter-relationships between the audit technology project and technology and audit strategies, and ensure that they are implemented and monitored in a co-ordinated way.

Recommendation 6
The IRD should urgently define the intelligence needs of taxpayer audit in the context of the Taxpayer Compliance Model and initiate projects to meet these needs. Elements of the Data Warehouse project that are essential to the improvement of taxpayer audit should be given a priority that enables them to be effectively co-ordinated with the taxpayer audit strategy.

Recommendation 7
The Compliance Risk Analyst role should be clearly communicated to staff. The Analysts’ managers should be made responsible for ensuring that their skills are effectively employed.

Recommendation 8
In its current reports to Parliament, the IRD should distinguish between the different types of discrepancies identified by taxpayer audit to provide a more transparent view of the value of additional tax assessed.

Recommendation 9
The review of the IRD’s quality measurement system should be completed as soon as possible, and (when completed) plans and timelines set for implementing the review’s recommendations.

Recommendation 10
The IRD should continue to explore ways of assessing the impact of audits on taxpayer compliance. It should adopt performance measures that provide investigators with the necessary incentives to align their audits with the aims of the compliance model.

Recommendation 11
The IRD should establish and implement sound arrangements for managing the changes required to taxpayer audit. The arrangements should meet the principles outlined above. The changes should also include senior management review and endorsement of new initiatives – after which audit staff should be expected to adopt them unless there are exceptional reasons why not. The expectation should be included in individual staff performance agreements.