Dimension 19.3. Revenue audit and investigation
DIMENSION MEASUREMENT GUIDANCE
19.3:1. This dimension assesses whether sufficient controls are in place to deter evasion and ensure that instances of noncompliance are revealed. Sound audit and fraud investigation systems managed and reported on according to a documented compliance improvement plan must be in place to ensure that once risks have been identified, there is follow-up to minimize revenue leakage. More serious issues of noncompliance involve deliberate attempts at payment evasion and fraud. This may involve collusion with representatives within a revenue administration. The ability of the revenue administration to identify, investigate, successfully prosecute, and impose penalties in major evasion and fraud cases on a regular basis is essential for ensuring that payers comply with their obligations. This dimension assesses use of audits and fraud investigations managed and reported on according to a documented compliance improvement plan. Dimension 19.2 assesses the extent to which a comprehensive, structured and systematic approach is used within the revenue entities for assessing and prioritizing risks.
19.3:2. The PEFA report narrative should note whether the revenue authorities have a compliance improvement plan to mitigate identified compliance risks. If a plan exists, the narrative should note whether the compliance improvement plan includes planned mitigation measures in respect of: (i) most or the majority of revenue; (ii) key payer segments; and (iii) risks associated with the four main obligation areas.
19.3:3. The PEFA report narrative should identify to what extent the compliance improvement plan for the most recent completed fiscal year is actually implemented as planned. It should also explain whether the information on execution of the planned audits and investigations is easily accessible to government or the public (including completion rates: planned versus conducted), and whether the outcomes on investigation, prosecution and decisions on penalties are available.
19.3:4: A compliance improvement plan is a high-level plan that describes in a single document the most significant compliance risks identified in the revenue system and the actions the revenue administration intends to take to mitigate those risks. Compliance improvement plans (also known as compliance management plans or programs) are commonly structured around major sources of revenue and payer segments.
Dimension 19.3. Scoring
|Score||Minimum requirements for scores|
|A||Entities collecting most revenue undertake audits and fraud investigations managed and reported on according to a documented compliance improvement plan, and complete all planned audits and investigations.|
|B||Entities collecting the majority of revenue undertake audits and fraud investigations managed and reported on according to a documented compliance improvement plan, and complete all planned audits and investigations|
|C||Entities collecting the majority of government revenue undertake audits and fraud investigations using a compliance improvement plan and complete the majority of planned audits and investigations|
|D||Performance is less than required for a C score.|
PEFA Handbook Volume 1: The PEFA Assessment Process – Planning, Managing and Using PEFA