Part 2: Setting a strategic direction for taxpayer audit

Inland Revenue Department: Performance of taxpayer audit – follow-up audit.

2.1
In this Part, we:

briefly describe our 2003 findings about taxpayer audit strategy; and
set out our findings in 2006.

Setting a strategic direction in 2003

2.2
In our 2003 report, we concluded that the IRD needed a detailed framework to bring together the large amount of work required to ensure that taxpayer audit can play its part in achieving the IRD’s aims.

2.3
We recommended that the IRD enhance its current strategy to improve the focus and conduct of audits, strengthen capability, and measure and report performance.

Our findings in 2006

2.4
Since our 2003 report, the IRD has developed its taxpayer audit strategy to include information and proposals to address the issues we highlighted. It has devised an extensive programme of projects to focus on developing resources, enhancing capability and measuring results.

2.5
At the time of our audit in 2003, the existing taxpayer audit strategy included a number of ongoing initiatives. The IRD brought these initiatives together into a formal programme, which was approved by senior management in August 2004. This programme refers to the recommendations of our 2003 report, and includes matrices to align the broad objectives of the programme closely with our recommendations.

2.6
The programme has nine objectives. Initially seven projects were identified to achieve these objectives and, over time, the delivery of these objectives was realigned into five projects. Three of the projects relate directly to our recommendations:

developing processes and resources– this project covers the focus and conduct of taxpayer audit, and strengthening capability;
scoping information needs, intelligence needs and technology needs – this project also covers capability; and
measuring results – this project includes reporting and measuring performance.

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