Richard Cornelisse

Indirect tax function effectiveness: Quantification of Risks and Root Cause Analysis

In Audit Defense, Indirect Tax Strategic Plan, Processes and Controls on 26/06/2014 at 12:05 pm

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As a follow-up of the VAT throughput exercise, statistical sampling could be used to measure the company’s ‚as is’ performance. Sampling has the added benefit that the exact amount of any tax assessment by the tax authorities is calculated.

The result could be used to get indirect taxes higher on the priority list, since managing of material risks that are quantified falls within the KPIs of the CFO.

For a root cause analysis the following questions should be asked in order seek to understand what caused the outcome:

  1. How did the results happen?
  2. Why did they happen?
  3. What specifically caused them to happen?

A root cause analysis is normally started via data collection and data analysis or ERP review and a clear understanding of the current processes.

Understanding the root cause is the first step to controlling outcomes. From a saving perspective, you want to know how to make them happen again, from a risk perspective you surely want to know how to prevent them the next time.

Via How to increase indirect tax function’s effectiveness / Richard Cornelisse

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