Risk Assessment for Tax Clearance process of Internal Revenue Commission, Papua New Guinea
Preliminary Information Gathering
Compliance Risk Assessment
- Gather financial statements and records.
- Analyze income sources for consistency.
- Verify revenue streams against reported figures.
- Look for discrepancies or unusual patterns.
- Document findings for further review.
- Review expense categories and amounts.
- Compare expenses to industry benchmarks.
- Identify any personal expenses claimed.
- Check for supporting documentation.
- Summarize findings and potential concerns.
- Search for audit history in records.
- Review outcomes and recommendations.
- Determine compliance with previous findings.
- Assess any patterns in taxpayer behavior.
- Compile a summary of past issues.
- Review filing history and timelines.
- Check for any late submissions.
- Assess payment records for timeliness.
- Identify patterns of non-compliance.
- Document adherence levels for reporting.
Operational Risk Assessment
- Review accounting manuals and policy documents.
- Identify key accounting procedures in place.
- Check for alignment with applicable tax laws.
- Assess frequency and method of policy updates.
- Evaluate training provided to staff on policies.
- Collect relevant contracts and invoices for review.
- Verify the completeness and accuracy of documents.
- Check for necessary approvals and signatures.
- Assess the consistency of documentation with reported figures.
- Identify any missing or incomplete documentation.
- Identify roles and responsibilities of personnel.
- Check for proper separation of key functions.
- Assess potential conflicts of interest.
- Evaluate access controls to financial systems.
- Review internal controls for effectiveness.
- Schedule interviews with relevant staff members.
- Prepare a list of questions regarding compliance.
- Document responses and insights gained.
- Identify gaps in knowledge or training.
- Assess the overall culture of compliance within the organization.
External Risk Factors
- Track inflation rates and currency fluctuations.
- Assess unemployment rates and their effects on disposable income.
- Evaluate changes in industry demand and consumer behavior.
- Consider global economic trends that may influence local markets.
- Identify key competitors and their market share.
- Assess pricing strategies and their impact on profitability.
- Evaluate barriers to entry for new competitors.
- Analyze market trends that could affect the taxpayer's position.
- Keep updated on changes to tax laws and regulations.
- Analyze the impact of proposed legislation on tax liabilities.
- Consult legal experts for interpretation of new laws.
- Monitor government announcements regarding tax policy changes.
- Conduct a thorough review of news articles and reports.
- Assess the credibility of sources reporting allegations.
- Investigate the context and details of any claims made.
- Determine potential implications for the taxpayer's compliance status.
Final Risk Evaluation
- Review findings from previous sections.
- Highlight discrepancies or patterns.
- Identify areas with significant risk indicators.
- Rank high-risk areas based on severity.
- Document all observations clearly.
- Define criteria for risk categorization.
- Create a matrix with likelihood and impact axes.
- Place identified risks into the matrix accordingly.
- Assign risk levels based on matrix placement.
- Review categorization with relevant stakeholders.
- Outline the report structure clearly.
- Include an executive summary of findings.
- Detail methodologies used in the assessment.
- Provide evidence and data for each finding.
- Conclude with insights and implications.
- Identify specific risks that need addressing.
- Develop actionable strategies for each identified risk.
- Prioritize recommendations based on effectiveness.
- Incorporate compliance regulations into suggestions.
- Outline implementation steps and responsible parties.
Documentation and Reporting
- Use standardized templates for consistency.
- Include date, findings, and responsible personnel.
- Organize findings by categories or themes.
- Ensure clarity and conciseness in descriptions.
- Review documentation for accuracy before finalization.
- Identify the correct officials and their contact information.
- Confirm submission requirements and deadlines.
- Ensure the report is complete and accurate.
- Use secure methods for submission (email, portal).
- Request confirmation of receipt from officials.
- Create a systematic filing system (digital/physical).
- Label files with dates and descriptions for easy retrieval.
- Ensure all documents are complete and legible.
- Set access controls for sensitive information.
- Regularly back up digital files to prevent loss.
- Define specific review intervals (e.g., quarterly, annually).
- Assign responsibilities for conducting reviews.
- Document findings and suggested adjustments.
- Communicate the timeline to all stakeholders.
- Set reminders for upcoming review dates.
Follow-Up Actions
- Identify high-risk taxpayers based on assessment results.
- Determine audit frequency and scope for each risk category.
- Assign audit teams and establish timelines for follow-ups.
- Document audit findings and adjust future risk ratings accordingly.
- Prioritize weaknesses based on potential impact and likelihood.
- Define specific, measurable actions to mitigate each risk.
- Assign responsibilities and deadlines for each action item.
- Monitor progress and adjust the plan as necessary.
- Assess the specific compliance needs of the taxpayer.
- Create or source training materials tailored to those needs.
- Schedule training sessions or distribute resources effectively.
- Evaluate the effectiveness of training and provide follow-up support.
- Establish a communication schedule with the taxpayer.
- Use clear, concise language to explain compliance obligations.
- Provide updates on any changes to tax laws or procedures.
- Encourage open dialogue for questions or clarifications.
Use in Manifestly