Karachi, November 22, 2024 – An independent auditor’s report prepared by Feroz Sharif Tariq & Co. has revealed that Dewan Farooque Motors Limited (DFML) has defaulted on the repayment of long-term loans from financial institutions amounting to Rs 1.097 billion. Additionally, short-term financing facilities totaling Rs 4.096 billion have expired and have not been renewed by banks.
(more…)Tag: audit
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FBR Tightens Screws on Tax Evaders Through Audit Changes
Karachi, August 8, 2024: In a bid to enhance tax compliance, the Federal Board of Revenue (FBR) has introduced significant changes to the sales tax audit process. The new measures, outlined in Sales Tax Circular No. 3, aim to make audits more targeted and effective.
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SBP Updates List of Eligible Audit Firms for Banks and Financial Institutions
KARACHI, October 25, 2023 – The State Bank of Pakistan (SBP) has recently made updates to the list of eligible audit firms for conducting audits of banks and financial institutions.
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Federal Tax Ombudsman Directs FBR to Conduct Audit of Banks for Withholding Tax Compliance
Islamabad, June 22, 2023: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to regularly conduct audit of banks to check compliance with the withholding tax provisions.
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FBR withdraws tax audit notices sent more than once in four years
KARACHI: Federal Board of Revenue (FBR) has withdrawn tax audit notices to taxpayers, who were selected for audit once in last four years.
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KTBA flays notices to taxpayers already audited
Karachi Tax Bar Association (KTBA) has flayed the issuance of audit notices by tax offices to taxpayers, who already selected once for audit in past four years.
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FBR launches forensic audit of WeBOC
ISLAMABAD: The Federal Board of Revenue (FBR) has launched forensic audit of Web Based One Customs (WeBOC) to determine the accuracy and correct application of duty and taxes.
In order to conduct forensic audit, the FBR invited firms for the assignment to conduct audit of the internal controls of WeBOC system for quality assurance for the year 2020/2021, 2019/2020 and 2018/2019.
READ MORE: Peshawar Customs seizes narcotics worth Rs80 million
The forensic audit is aimed at assuring that the mechanism of internal controls, business decisions, rules, policies, and procedures are well defined, correctly calculated, and if not then recommend possible solution/ way forward.
It is meant to analyze that the systems in place are capable – fully automated with seamless integration of all Customs’ business processes.
The applicant firm is expected to analyze the WeBOC’s capability in carrying out the day-to-day functions, its governance model, business rules, duty calculation across all regimes, correctness of information as an output, and security structures etc.
READ MORE: No promotion of IRS officers without asset declaration
The Internal Control Audit will identify the strengths and weaknesses as follows and recommend appropriate actions to FBR, namely:
i. Whether the rates of Customs Duties, Additional Customs Duties and Regulatory Duties are properly and correctly fed vis-à-vis updated from time to time as applicable in the System?
ii. Whether the WeBOC System correctly calculates and collect the duties as per statutory rates?
iii. Review the feeding, calculation, and collection of domestic taxes i.e., Sales Tax, Withholding Tax and Federal Excise Duty at import stage.
iv. Examine the correctness of feeding of Fifth Schedule in the WeBOC along with its conditions, when and where applicable.
v. Whether rates of duties and taxes were updated in the WeBOC as and when legally changed since January 01, 2018?
READ MORE: FBR announces sharp cut in sales tax on POL products
vi. The firm will also examine and audit whether different SROs have been correctly fed/ updated in the System along with respective conditions. Any difference or deviation in the SROs feeding/ updating and application in the System will be reported accordingly.
vii. Whether changes were made in the System with corresponding changes in the SROs from time to time in a correct and timely manner?
viii. Whether Valuation Rulings (VRs) issued by the Directorate General of Customs Valuation have been properly entered into the System?
ix. Whether the System correctly applies the VRs on the respective goods or not? The required audited period will be for a period of three years.
Based on the indicated activities, the audit should: (i) map the involved internal control mechanisms; (ii) point out the main weaknesses of the involved internal controls; (iii) identify the main causes; and (iv) propose mitigation measures. The audit and subsequent recommendations should be both quantitative and qualitative considering efficiency and effectiveness of the system, its performance, and corresponding data (input)/ information (output) correctness – real-time and secured operations.
READ MORE: IR offices to work on Saturdays for revenue target
The FBR under the Component-II (Technical Assistance) of the Pakistan Raises Revenue (PRR) project requests the services of a reputable consulting firm to conduct a forensic audit of the WeBOC System of FBR for quality assurance through methodological testing.
The WeBOC system was rolled out in 2012 and has been designed and developed as per the business requirements and vision of Customs i.e., paperless, end-to-end integration, minimum dwell time, 24/7 service, transparency, automated and simplified procedures, improved risk management system including automated feedback mechanisms, better controls, electronic filing, minimum interaction with trader and Customs authorities, efficient information management system, e-gates, online payment, and single window operations.
The underlying idea was/ is to have compliance of international trade facilitation agreements and to develop Customs system in line with international good practices. It provides real time integration of clearing agents, traders, brokers, terminal operators, cargo handlers, shipping agents, bonded carriers, warehouses, airlines, and customs officials for the clearance of trade consignments.
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PTBA criticizes third-party audit of taxpayers
Pakistan Tax Bar Association (PTBA) has expressed concerns over decisions of the authorities to conduct audit of taxpayers through external auditors.
In a statement, the apex tax bar of the country, expressed concerns over the decision taken by the Federal Board of Revenue (FBR) regarding the assignment of cases of Income Tax, Sales Tax and Federal Excise Duty to the third-party auditors for conducting audit of the taxpayers’ affairs.
READ MORE: PTBA highlights taxation problem of NPOs, Trust
The PTBA said that the cases of those taxpayers were selected for audit, who had filed the returns of income tax and sales tax voluntarily. “Conducting third party audit of such taxpayers will result to open doors of corruption.”
Additional cost of which will have to be borne by the taxpayers, who are already on tax role and paying their taxes voluntarily.
READ MORE: PTBA declares implementing digital payment not practical
PTBA President Rana Munir Hussain in the statement said: “It will also increase the cost of doing business, which will lead to increase in inflation.”
The FBR decision will also give a negative message to the general public that either the field formation of the FBR is not trustworthy or incompetent. “The FBR should also take lesson from its past decision/experience when the same idea was failed badly.”
The decision for referring the audit to third parties will also be conflict of interest as most of the audit firms appearing on the panel of the FBR are also engaged in tax practice.
READ MORE: Extend date for return filing till Dec 31, PTBA asks FBR
“The FBR instead squeezing the taxpayers, who are already on the tax role, should focus on the recovery of due tax from 25 million persons who admittedly are earning millions of rupees but contributing nothing to national exchequer.”
Further, the PTBA said that there was not need to promulgate the Finance Supplementary Act, 2022. “It will adversely affect the financial position of general public and increase the cost of living of common men, those are already suffering due to the pandemic and will further increase the inflation in the country.”
READ MORE: FBR authorized to appoint special panels for tax audit
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Self assessment scheme to facilitate taxpayers: Tarin
KARACHI: Finance Minister Shaukat Tarin on Friday said that the Universal Self Assessment Scheme (USAS) has been reintroduced. This scheme will facilitate taxpayers in declaring income and assets.
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Third-party to conduct audit of 15 million potential taxpayers: Shaukat Tarin
Finance Minister Shaukat Tarin announced on Tuesday that the government is set to launch Universal Self-Assessment, a third-party approach, for auditing 15 million potential taxpayers.
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