Auditor General of Pakistan has decided to conduct the audit of revenue receipts and accounts of the Federal Board of Revenue (FBR) including its field formations for fiscal year (2007-2008) from October 1, 2008. Sources told Business Recorder on Saturday that the AG office would carry out audit of revenue receipts of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) from next month.
According to the AG office, the Auditor General has been empowered to conduct audit of the government departments under Article 169 and 171 of the Constitution of Pakistan and AG rules and regulations. The AG has the mandate to verify records and other receipts of the government departments under these articles of the Constitution.
Secondly, section 14 of the Auditor General Ordinance has also empowered the AG to demand record from the FBR. Tax authorities should provide necessary information and data for carrying out smooth audit of the FBR and its field formations. The board had empowered sales tax officials to conduct audit of tax records of registered persons in cases where Auditor-General of Pakistan had completed audit within the same year.
The FBR has amended section 25 of the Sales Tax Act, 1990 through Finance Act 2008 to give legal backing to the audit of Directorate General of Revenue Receipt Audit (DRRA), a subsidiary of the AG office.
Under revised sub-section (2) of section 25 of the Sales Tax Act, the sales tax officer, on the basis of the record, may, once in a year, conduct audit. Provided further that nothing in this sub-section shall bar the sales tax officer from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan.
When contacted, sources opined that the board has started a new controversy by amending section 25 due to permission of several audits in a year. Without realising the serious implications of the amendment, the board has allowed sales tax officials to conduct audit even in cases where the DRRA has already completed audit.
It is yet not clear that why the board had introduced this amendment in circumstances where the FBR has challenged the authority of DRRA for accessing taxpayer''s record. The FBR does not accept the DRRA powers to directly access taxpayers'' record. This amendment might also give legal backing to the DRRA sketchy audit notices issued through the collectorates of sales tax.
There were cases where taxpayers were reluctant to provide record to the FBR auditors in cases where DRRA has completed the audit. On the other hand, it seemed that now the taxpayers would face two audits in one year. The FBR auditors could conduct audit in cases where DRRA has done the job. It would also be resulted in double audit of the taxpayers in one year, reflecting towards harassment to the taxpayers.
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