The Kenya Revenue Authority (KRA) held a workshop to sensitize tax payers on Audit Management Framework and the Alternative Dispute Resolution. In an effort to improve and enhance their role of facilitating business, KRA has developed an audit governance framework aimed at more providing more transparency in the audit process.
Audit Governance framework
The governance framework is anchored on 8 key pillars;
- Transparency of audit and case investigations;
- An independent team will be scientifically allocating and selecting the audits and case investigations.
- Auditors no longer select which audits to undertake.
- Auditors will be rotated from year to year.
- A module for registration of cases accessible to all relevant offices (LTO, MTO)
- Focus and quality of notices – Previously notices have been very generic but this has changed. Notices will be clear on what is intended, whether it is a compliance check, audit or an investigation
- Clear scope of work- Periods and records to be covered under each of the above have been clearly defined as follows;
- Compliance checks; records going back 1 year
- Audit; Records going back 2 years. This can be extended to 7 years but only with approval.
- Investigation; Records going back 7 years but can be extended if there are issues such as fraud.
- Returning of confiscated tax payers records; the law requires KRA to return such records within 6 months. KRA is however issuing back certified copies or original copies of documents on request where continued withholding of such documents jeopardizes a tax payers business. Computers are being imaged and returned to tax payers immediately
- Reports-Reports are now standardized containing relevant and key information. Reports shall now be digitally and centrally filed with all concerned departments having access. This will help in compliance follow-ups and avoiding repeat of audits.
- Control of audit and investigation activities-Restructuring has seen the audit departments moved as back office activities while tax payer services are now front office services taking more and have been expanded. Further to LTO and MTO offices, there will now be regional audit centers of excellence outfield. The centers will be managed by a chief manager with a team of auditors falling under him/her.
- All audits and case investigations must be registered. No unregistered audits and cases will be undertaken. Auditors cannot choose their own audits.
- Integrity assessments to be done on all auditors by a tea of assessors. An internal unit of assessors will do assessments and make tests on actions undertaken by auditors
Alternative Dispute Resolution (ADR) division
In March of 2015, KRA started a new division to provide an alternative avenue for dispute resolution other than the court process. The objectives of the ADR mechanism is to reduce the cost of litigation on both KRA and the tax payer, therefore providing value for money, enhance service delivery, trust and facilitation between KRA and tax payers, entrench confidentiality and encourage compliance.
The ADR policy is expected to be launched on June 9, 2015, after which it will be open for use. KRA has involved tax practitioners through ICPAK and the private sector through KEPSA and other sector associations.