Tax Administration Diagnostic Assessment Tool MODULE 11 “POA 9: ACCOUNTABILITY AND TRANSPARENCY”
Desired Outcome of POA 9 The tax administration is : transparent in the conduct of its activities, and accountable to the government and the community. Background Accountability and transparency are the two central pillars of good governance. Their institutionalization reflects the principle that tax administration should be answerable for the way they use public resources and exercise authority. To enhance public confidence and trust, tax administration should be openly accountable for its actions within a framework of responsibility to the minister, legislature and the general public.
International Good Practice in Accountability and Transparency POA 9 External oversight of the tax administration’s financial and operational performance by parliament and supreme audit body Independent and impartial investigation by an ombudsman or equivalent Regular reporting to senior management of actions on recommendations of ombudsman and anti- corruption agency Embracing ethical standards and procedures to prevent misuse of office Internal controls to protect the systems from fraud and error Internal audit ensuring adherence to internal control, risk management and governance framework Internal mechanisms to formulate and execute integrity/ethics policy and investigate misconduct Engagement of citizens through stakeholder consultation and client surveys
Performance Indicators: P9 – Accountability and Transparency Dimensions High Level Indicators P9-25: Internal assurance mechanism M2 The level of assurance provided by internal audit Staff integrity assurance mechanism P9-26: External oversight of tax administration M2 Extent of independent external oversight of the tax agency’s operations and financial performance The investigation process for suspected wrongdoing or mal- administration P9-27: Public perception of integrity M1 The mechanism for monitoring public confidence in the tax administration P9-28: Publication of activities, results and plans M2 Extent to which the financial and operational performance of the tax administration is made public, and the timeliness of publication Extent to which tax administration’s future directions and plans are made public, and the timeliness of publication
Scoring P9-25-1: Level of assurance provided by internal audit A The tax administration has an independent internal audit unit reporting directly to the audit committee There is a central repository of all internal control policies, processes and procedures Annual internal audit program comprise of internal control checks, performance audits, IT systems audit and financial audits for all key operations. - All individual interactions are traceable to individual users and internal audit has skills to identify inappropriate actions - Reports on security incidents are available There is regular training of internal auditors in audit methodologies Systematic and independent review of internal audit operations and systems at least once every five years
Scoring P9-25-1: Level of assurance provided by internal audit B The tax administration has an independent internal audit unit reporting directly to the head or board There is a central repository of all internal control policies, processes and procedures Annual internal audit program comprise of internal control checks, performance audits, IT systems audit and financial audits for all key operations. - All individual interactions are traceable to individual users and internal audit has skills to identify inappropriate actions - Reports on security incidents are NOT available There is regular training of internal auditors in audit methodologies Systematic and independent review of internal audit operations and systems at least once every seven years
Scoring P9-25-1: Level of assurance provided by internal audit C The tax administration has an independent internal audit unit reporting BUT does not report directly to the head or board There is NO central repository of all internal control policies, processes and procedures Annual internal audit program comprise of internal control checks, and financial audits BUT NOT performance audits, IT systems audit - All individual interactions are NOT traceable to individual users and internal audit DOES NOT HAVE skills to identify inappropriate actions - Reports on security incidents are NOT available There is ad hoc training of internal auditors in audit methodologies Some systematic and independent review of internal audit operations and systems done once in the last ten years
Scoring P9-25-2: Staff integrity assurance mechanisms A The tax administration has an independent internal affairs unit reporting directly to the head or deputy head. The internal affairs unit: * Has appropriate investigative powers, and exercises these powers with due process. * Provides leadership to the formulation of integrity and ethics policy, including codes of conduct. * Cooperates with relevant enforcement and prosecution agencies. Maintains integrity- related statistics for the agency, while preserving confidentiality. * The integrity statistics are publicly reported.
Scoring P9-25-2: Staff integrity assurance mechanisms B The tax administration has an independent internal affairs unit reporting directly to the head or deputy head. The internal affairs unit: * Has appropriate investigative powers, and exercises these powers with due process. * Provides leadership to the formulation of integrity and ethics policy, including codes of conduct. * Cooperates with relevant enforcement and prosecution agencies. DOES NOT maintain integrity-related statistics for the agency, while preserving confidentiality. * The integrity statistics are NOT publicly reported.
Scoring P9-25-2: Staff integrity assurance mechanisms C The tax administration has an independent internal affairs unit BUT DOES NOT report directly to the head or deputy head. The internal affairs unit: * Has appropriate investigative powers, and exercises these powers with due process. * DOES NOT provides leadership to the formulation of integrity and ethics policy, including codes of conduct. * DOES NOT Cooperates with relevant enforcement and prosecution agencies. DOES NOT maintain integrity-related statistics for the agency, while preserving confidentiality. * The integrity statistics are NOT publicly reported.
Scoring P9-26-1: The extent of independent external oversight of operational and financial performance A Annual external audit of the tax administration’s financial statements by an external review body government auditor or other independent entity) Annual program of operational performance audits by an external review body (e.g., government auditor) External review findings are responded to by the tax administration External review findings and the response of the tax administration or ministry of finance are publically reported
Scoring P9-26-1: The extent of independent external oversight of operational and financial performance B Annual external audit of the tax administration’s financial statements by an external review body government auditor or other independent entity) Annual program of operational performance audits by an external review body (e.g., government auditor) External review findings are responded to by the tax administration External review findings and the response of the tax administration or ministry of finance are NOT publically reported
Scoring P9-26-1: The extent of independent external oversight of operational and financial performance C Annual external audit of the tax administration’s financial statements by an external review body government auditor or other independent entity) NO program of operational performance audits by an external review body (e.g., government auditor) External review findings are responded to by the tax administration External review findings and the response of the tax administration or ministry of finance are NOT publically reported
Scoring P9-26-2: Investigation process for wrongdoing and maladministration A A tax ombudsman investigates unresolved complaints from taxpayers. Systematic service and fairness problems are reported to the minister. An anti-corruption agency oversees tax administration anti- corruption policies and investigates alleged corrupt conduct There is regular (i.e., monthly) and systematic monitoring to senior management and reporting of actions taken in response to recommendations of ombudsman or anti-corruption agency.
Scoring P9-26-2: Investigation process for suspected wrongdoing and maladministration B A tax ombudsman investigates complaints from taxpayers. Systematic service and fairness problems are not reported to the tax administration and government. An anti-corruption agency oversees tax administration anti- corruption policies and investigates alleged corrupt conduct There is regular (i.e., monthly) and systematic monitoring and reporting of actions taken in response to recommendations of ombudsman or anti-corruption.
Scoring P9-26-2: Investigation process for suspected wrongdoing and maladministration C A tax ombudsman or equivalent authority exists BUT on an AD HOC basis An anti-corruption agency exists BUT only investigates cases of alleged corrupt conduct. Does NOT oversee the anti-corruption policies Limited evidence that findings and recommendations of investigative agencies are acted upon systematically.
A Independent third party survey based on statistically valid sample to monitor level of public confidence Conducted at least every 2 years Results of survey are made public within 6 months of completion Tax administration takes the survey results into account for reviewing its integrity framework and public relations B Independent third party survey based on statistically valid sample to monitor level of public confidence Conducted at least every 3 years Results of survey are made public within 9 months of completion Tax administration takes the survey results into account for reviewing its integrity framework and public relations C A survey - conducted by tax administration itself or independent third party - based on statistically valid sample to monitor level of public confidence Conducted at least every 4 years Results of survey are made public within 9 months of completion Tax administration takes the survey results into account for reviewing its integrity framework and public relations D The requirements for a ‘C’ rating or higher are not met. Scoring P9-27: Mechanism of monitoring public confidence in the tax administration
A A report to the government is produced on an annual basis outlining the full financial and operational performance of the tax administration for the immediate past fiscal year. The report is made public within 6 months of the end of the fiscal year B A report to the government is produced on an annual basis outlining the full financial and operational performance of the tax administration for the immediate past fiscal year. The report is made public within 9 months of the end of the fiscal year C A report to the government is produced on an annual basis outlining the full financial and operational performance of the tax administration for the immediate past fiscal year. The report is made public within 12 months of the end of the fiscal year D The requirements for a ‘C’ rating or higher are not met. Scoring P9-28-1: Extent to which the financial and operational performance of the tax administration is reported
A Strategic and operational plans are made public in advance of the period covered by the plans. B Strategic and operational plans are made public within 3 months of the start of the period covered by the plans. C Elements of the plan are made public within 3 months of the start of the period covered by the plans. D The requirements for a ‘C’ rating or higher are not met. Scoring P9-28-2: Extent to which the tax administration’s future directions and plans are published