Tax Audit BFR V6.0-16July2021

Ministry of Revenues
Integrated Tax
Administration System
(ITAS)
Business and Functional
Requirement for Tax Audit Core
Process
July 2021
1
Document Control
VERSION HISTORY
Version Date Revised By Reason for change

#
1.0 November-2020 BPT Team Drafted the document
1.1 November-2020 TTO Leadership Review comments
1.2 November-2020 BPT Team Review comments
1.3 December-2020 TTO Leadership Review comments
1.4 December-2020 IMF Team Review comments
1.5 December-2020 Data/IT Team Review comments
1.6 February-2020 BPT Team Revised the document
2.0 March-2021 BPT Team Revised as per WSTs comments
3.0 March-2021 BPT Team Revised the document and formatting
4.0 April-2021 TTO Team Revised as per comments from regions and city
administration comments
5.0 June-2021 TTO Team Revised as per internal alignment inputs
6.0 July-2021 TTO Team Revised as per IMF quality check feedback
DOCUMENT APPROVALS
Approver Name Role Signature Date
Ato Berhanu Abebe Director, Tax Audit Directorate
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Contents
Document Control..................................................................................................................... 2
PART I. Introduction.................................................................................................................. 4
1.1. Background and Context...............................................................................................................................4
1.2. Purpose of the Document..............................................................................................................................5
Part II. Business and Functional Requirements for Tax Audit Core Process.......................5
2.1. Business Requirement..........................................................................................................................................5
2.2. Functional Requirement.......................................................................................................................................7
2.2.1. Case Selection and Assignment.......................................................................................................................8
2.2.1.1 Case Selection and Assignment....................................................................8
2.2.2. Case Selection and Assignment.....................................................................................................................11
2.2.2.2. Initial Meeting with Taxpayer......................................................................13
2.2.3. Audit Execution.............................................................................................................................................14
2.2.3.1. Desk Audit..................................................................................................14
2.2.3.2. Comprehensive Audit.................................................................................16
2.2.3.3. Transfer Pricing Audit.................................................................................19
2.2.3.4. Issue Audit..................................................................................................22
2.2.4. Audit Completion...........................................................................................................................................24
2.2.5. Audit Quality Assurance................................................................................................................................28
2.2.5.1. Conduct Audit Quality Assurance Review.................................................28
2.2.6. Joint Audit......................................................................................................................................................31
2.2.6.1. Joint Audit Case Selectin and Assignment................................................31
2.2.6.2. Preparation for Joint Audit Cases..............................................................33
2.2.6.3. Initial Meeting with Taxpayer......................................................................35
2.2.6.4. Perform Joint Audit.....................................................................................36
2.2.6.5. Joint Audit Completion................................................................................38
3. Annexures............................................................................................................................ 39
Annex 1. List of Acronyms.......................................................................................................................................39
Annex 2. Requirement Prioritization Convention....................................................................................................39
Annex 3. Glossary of Terms.....................................................................................................................................39
Annex 4. Related Reference Documents..................................................................................................................39
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PART I. Introduction
1.1. Background and Context
Ministry of Revenues has developed its ten-year strategic plan (from 2013 - 2022 Ethiopian
Calendar) with a vision to build a modern tax administration which enables the country to cover
its expenditures from tax and customs income. Realizing that the current state of operational
capability is not adequate to meet realize its vision and achieve its strategic goals, the ministry
launched a five-year tax transformation programme, identifying key priority areas of reform.
Business Process Transformation (BPT) is one of the six priority areas that the tax
transformation programme will be implementing during this period. This BPT is intended to
bring about operational excellence and organizational efficiency to deliver the mission given to
the ministry i.e., increasing revenue collections, customer satisfaction, voluntary compliance,
digitalization and other performance perspectives. Without such transformation initiatives, MoR
cannot keep abreast of global developments and support the nation’s economy to the expected
level.
In depth analysis of the Ministry’s current processes revealed the following major gaps:
 High level of manual processing;

 High compliance costs for taxpayers;
 Lack of integration and data sharing;
 Increased cost of collection and enforcement to the Ministry;
 Lack of standardized list of required process input documents;
 Technology and infrastructure limitations;
 Limited role of risk management;
 Static risk model;
 Lack of Automated Document Management and Case Management Systems;
 Limited Focus and Scope for Taxpayer Education;
 Lack of Coordination and Communication;
 Lack of adequate human capacity
4
In order to realize the ambitious vision and alleviate the challenges in its current processes, the
Ministry decided to undergo massive business process transformation across its core and
enforcement processes. Besides, based on the revised business process, the Ministry decided
to implement an integrated tax administration system (ITAS) and related technologies.
Currently, future state (To-Be) business processes are mapped for the domestic tax 12 core
processes using Business Process Modeling and Notation (BPMN V2.0) methodology and
Bizagi modeling tool. To harmonize business processes and business/functional requirement
for federal, regions and city administrations, the Ministry organized a one-week harmonization
workshop. Hence, this document is prepared to elicit business and functional requirements of
the Ministry (including federal, regions and city administrations) based on approved future state
(To-be) business process maps and formally document the requirements for further use.
1.2. Purpose of the Document
This document defines the high level business requirements and detailed functional
requirements of Integrated Tax Administration System (ITAS) project. The document will be
used as basis for the following activities:
 Creating request(s) for proposal (RfP) – in particular for a planned new Integrated
Tax Administration System (ITAS) bit also for other components of MOR’s
modernization such as an e-invoicing solution, and Data Warehouse / BI solution;
 Creating solution designs;
 Developing Standard Operating Procedures for MoR officers;
 Developing test plans, test scripts, and test cases;
 Assessing project success in terms of meeting client requirements;
Part II. Business and Functional Requirements for Tax Audit Core
Process
2.1. Business Requirement

The tax audit process shall enable the Ministry to audit cases originating from risk engine and selected by
the Risk Directorate. Sometimes audit cases may emanate from senior management and/or, intelligence
Directorate but should pass through the Risk Directorate before reaching the Audit Directorate for audit.
5
The aim of tax audit is to check whether taxpayers are maintaining their books of accounts as per the tax
rules and regulations, to identify understatement of tax declared and to issue audit assessments to the
taxpayer, to educate the taxpayer on how to improve compliance in the future, identify and share with the
Risk Directorate the unlawful practices by the taxpayer for future risk profiling. Tax audit can also be
regarded as an examination of whether a taxpayer has correctly assessed and reported their tax liability
and fulfilled their obligations. The system is expected to satisfy the following high-level business
requirements of the ministry with regards to the audit core process:
a. Case Selection, Assignment and Initial Meeting (Audit Planning)
 Register audit cases, take preparatory steps and schedule and conduct initial meeting with the
taxpayer.
b. Audit Execution (Desk, Comprehensive, Transfer Pricing, Issue Audits)
 Computerizing the audit processes and use appropriate audit tools for various types of audit listed
above
 Integration with Customs and other third-party systems to supplement the audit processes.
c. Audit Completion
 Involves such activities as preparation and indexing of audit working papers and issuance of audit
assessment notice.
d. Audit Quality Assurance
 Upload policies, procedures and upload for ease of reference when conducting audit and Audit
Quality Assurance.
 Review completed audit cases to confirm whether the policies, procedures, controls, templates,
quality standards of the tax audit manual are fully implemented.
e. Joint Audit (Tax audit and PCA)
 Upload joint Audit planning, policies, procedures, and guidelines and update regularly.
 Record every step of the joint audit from end to end until an assessment notice is generated,
approved and issued.
 Produce regular reports on the progress of the joint audit against plan
f. Audit Case Management system
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Provide an automated case management system which allows registration of an audit case with a case
number, assignment and reassignment of a case to an auditor or audit team by a team leader, creating
audit teams for complex audits and provide collaborative environment for creating and editing case notes,
recording activities accomplished by auditor, monitor progress against audit time plan, generate audit
assessment notice, route the Notice across a defined validation and approval process until final approval
by an authorized person, send out the assessment notice to the taxpayer electronically or allow the
auditor to print, hand deliver to taxpayer, update the case management system, provide team leader
oversight of audit progress, and automatically generate periodic reports on progress of audit. It shall also
provide for recording objections for internal review, appeal to the Tax Appeal Commission and the Courts,
amend the assessment and send out revised audit assessments at the conclusion of each stage of the
review and appeal process keeping the earlier assessment history in the system.
2.2. Functional Requirement

This section presents the To-Be business process map for all sub processes under the tax audit core
process and details of functional requirements aligned with the future state (To-Be) sub process maps:
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2.2.1. Create Audit Plan
ID Requirement Description Priority Remark

(Mandatory
(M)/Preferred
(P)
FR-04.0-01 System shall enable audit team to create, review, M
update audit plan and submit to audit director for
review.
This shall include an iterative process that takes into
account current (annual) audit tactics, selection of
case volumes by type (desk, field, joint audit, single
issue, comprehensive, etc.) and effort estimates /
guidelines per type, and skill capacities per skill type
and location.
FR-04.0-02 System shall enable the audit director to review and M
approve the audit plan. Upon director’s approval, the
system shall notify the business
units/branches/regions about updated audit plan and
request feedback
FR-04.0-03 System shall enable the business M
units/branches/regions to review the audit plan and
provide feedback and submit to the audit director.
FR-04.0-04 System shall enable the audit director to review the M
feedback from business units/branches/regions and
amend as per feedback and finalize the audit plan.
The plan may go through several versions and
system shall have version control system.
FR-04.0-05 As the audit director approves the plan, system shall M

send notification and the plan to the Senior
9
(Mandatory
(M)/Preferred
(P)
Management or Risk Management Committee to
review and approve the audit plan. Upon approval,
the system shall send the approved audit plan and
notify the audit director and business
units/branches/regions.
2.2.2 Case Selection and Assignment

(Mandatory
(M)/Preferred
(P)
FR-04.1-01 System shall enable the audit team to view audit M
cases selected on risk bases by the Risk Directorate
by order of their risk ranking, by branch, taxpayer
segment, audit type (as desk audit, comprehensive
audit, issue audit, and transfer pricing audit) and
other configurable parameters such as audit
population, credibility checks, risk parameters, etc.
10
(Mandatory
(M)/Preferred
(P)
The risk engine shall consider the senior
management inputs.
Case selection shall include a random selection
feature to assist with feedback to the audit selection
model.
The system shall allow process owner to view cases

subject to audit identified by the risk engine.
The system shall allow users to define and configure

the audit case types, which includes the scope and
coverage of the audit cases, the estimated duration
for finalization of the audit cases, etc. (E.g. issue
audit, desk audit, transfer pricing audits,
comprehensive audits, etc.)
FR-04.1-02 The system shall enable other directorates to identify M
auditable cases (tax clearance, business closure, etc)
and request for audit.
FR-04.1-03 The system shall enable external stakeholders to M
identify auditable cases and request for audit.
FR-04.1-04 The system shall enable the tax audit process Lead/ M Configurable rule
owner to receive selected audit cases, assess the parameter to
strength of risk referral per case type and determine determine number of
the number of cases to be audited during the fiscal cases to be audited
year based on the available staff capacity (numbers
and skills).
System shall generate list of auditable cases based

on predefined risk parameters and enable the
process owner to prioritize selected audit cases
based on the Risk priority ranking the Risk
Directorate has provided.
The system must have capability to risk profile
taxpayers and amend risk indicators. Among others,
audit risk profiling should include the following
 Match taxpayer data with reliable third-party

data sources (to be defined from time to time).
 Search for patterns of under-reporting.
 Search for patterns that indicate potential
revenue risk.
 Identify patterns in taxpayer filing and
payments.
 Perform forensic modelling e.g. Non-
submission of returns
 Continuous losses or repayments Financial
statements
 Compare values of imports and returns by the
same taxpayer
FR-04.1-05 System shall enable tax audit process owner to load M
the cases in to the system and attach treatment plan
to the cases.
FR-04.1-06 The system shall automatically allocate audit cases M
to auditors and audit team leaders (if required) by
considering their area of expertise, work load and
other business rules to be defined in the system.
11
(Mandatory
(M)/Preferred
(P)
System shall also notify the auditor and audit team
lead upon assignment. Once automatic allocation is
done, the system should raise an alert if a case is not
attended to after a given number of days
FR-04.1-07 System shall enable re-allocation of cases from one M
officer to another at approved authority levels.
FR-04.1-08 System shall generate and assign a case number for M
each audit case and shall enable the process owner
to assign cases to audit teams or auditors via the
case management system.
The system shall treat every audit case as part of a

case management process flow with distinct steps,
delegations, approvals/rejections, reports,
notifications and others.
There shall be standard templates for workflows per

case type and this shall be included in the (electronic)
case preparation dossier.
Each specific case would contain an (electronic)

dossier of pertinent facts per case-type, and selection
reason, selected tax-payer, and select purpose(s) of
audit.
The system shall allow capturing details of each

steps and status.
System shall automatically link each audit case to the

start and end date provided in the annual audit plan
and allow further allocation of detailed audit
segments to individual auditors with start and end
dates
System shall allow making changes to audit start and

end dates of specific audit cases and maintain an
audit trail of the modifications to the system when
approved by an authorized official.
FR-04.1-09 System shall make available an audit Case M

Management Module (CMM) in which the auditor will
be able to register the audit case with an
automatically generated case number, start date and
expected end date.
System shall enable the auditor to record work done

on a daily basis in the CMM, which will be the basis
for the system to generate report on progress of audit
on a periodic basis (weekly, monthly, etc.,) and staff
productivity reports
System shall enable the auditor to record work done

daily in the CMM automatically monitor work done by
each member of the audit team and measure
progress against planned completion date allocated
for each audit segment.
12
(Mandatory
(M)/Preferred
(P)
Audit team leaders shall have access to monitor case
progress.
System shall automatically send case to Intelligence

and investigation when a set of criteria is met
FR-04.1-10 The audit case management system shall have the M
following features:
 Must have configurable rules for audit
case allocation.
 Assign cases and tasks based on
classification of taxpayers (LTO, MTO,
STO, Geographic, industry risk profile).
 Execute case allocation rules
automatically and interactively.
 Must allocate cases and tasks according
to the skills and expertise of audit
officers.
 Must allocate cases and tasks according
to existing workloads and availability of
staff.
 Support audit case management for
dynamic and sometimes large teams.
 This is critical to ensure that cases are
assigned to appropriate auditors
2.2.3. Audit Case Planning and Programming

Mandatory
(M)/Preferred (P)
FR-04.2-01 The system shall enable the auditor to evaluate the M
13
Mandatory
(M)/Preferred (P)
case assigned to him/her based on information
available in the data warehouse.
This shall include confirmation that the taxpayer is not
already included in another audit case.
FR-04.2-02 The system shall enable the auditor to analyze the M
taxpayer file and case dossier. If additional supporting
documents are required from the taxpayer, system
shall enable the auditor to request additional
information using the system.
System shall enable taxpayer to upload additional

information as requested by the auditor.
FR-04.2-03 The system shall present taxpayer information, M
taxpayer filling, payment, audit and other detailed
information. In addition, the system shall present the
risk engine criteria that has led the taxpayer to be
selected with drill down capability.
The system shall enable the tax auditor to review the

taxpayer’s file and record findings on previous audit, if
not already in the system. This involves reviewing and
documenting the specific areas of risk identified by
analyzing the taxpayer returns and financial
statements identifying the areas the audit should focus
on.
FR-04.2-04 The system shall enable the auditor to determine the M

materiality (objective, scope, context and resource
needed) for the audit.
FR-04.2-05 The system shall enable the auditor to perform M
research on the taxpayer’s industry. This might
involve computing various ratios, with comparison
across sectors/industries to enhance the auditor’s
ability to identify issues the audit should look at.
FR-04.2-06 The system shall enable the auditor to determine the M
audit sampling method. System shall support various
scientific sampling methods including stratified
sampling, random sampling, systematic sampling etc
as per the requirements of the Ministry.
FR-04.2-07 The system shall prepopulate the taxpayer basic M
information for the auditor. Audit plan types, audit
System shall enable the tax auditor to prepare the types, audit steps
audit plan specific for the audit case specifying audit should be configurable
segments and the audit program to be followed for
each type of tax and tax period as appropriate. Upon
completion, system shall enable the tax auditor to
submit the plan for tax audit team leader or process
owner for review and approval.
The system shall also provide a functionality for

auditors to set up audit targets auditor-wise based on
the complexity of the audit case and the number of
cases assigned.
The audit plan contents will be agreed during

requirement validation
The system shall support various modes of audit case

work including desk audits, field audits, issue based
14
Mandatory
(M)/Preferred (P)
audits, comprehensive audits and investigations.
FR-04.2-08 Upon team leader’s/process owner’s approval, system M

shall notify the tax auditor about approval of the audit
plan so that auditor identifies information/evidences
required from the taxpayer.
FR-04.2-09 If initial meeting with taxpayer is required, the system M
shall enable the auditor to trigger an initial meeting
following sub process ’Entry Conference with the
Taxpayer’ will be triggered.
FR-04.2-10 System shall enable the tax auditor to upload analysis M Audit preparation
made on the audit preparations. Documents vouched, report is configurable
evidences and findings obtained from his/her personal
computer with adequate security of data, storing
complete audit working papers for future reference.
Once analysis is completed, the system shall allow the

auditor to prepare audit preparation report and the
report be documented.
FR-04.2-11 System shall enable tax audit team leader and other M
authorized persons to review results of the audit,
electronically sign and route to the next hierarchy until
the final authorized person approves or decides on the
audit case electronically.
FR-04.2-12 If there is any fraudulent activity traced at this stage, M
system shall trigger ‘Tax Intelligence and Fraud
Investigation’ sub process.
2.2.3.1. Entry Conference with Taxpayer
15
(Mandatory
(M)/Preferred (P)
FR-04.2.1-01 System shall enable the tax auditor to prepare and M
schedule and reschedule an initial meeting with the
taxpayer. This might include planning interview details
to obtain information/ records and documents that may
be required for the audit.
The system shall support booking interview rooms.

General rule: no taxpayers in the tax office except in
the tax assistance area and in interview rooms
adjoining the tax assistance area.
The system shall prompt the auditor about upcoming /

overdue meetings.
FR-04.2.1-02 System shall enable auditor to notify (through email, M
eservice portal and print) the taxpayer the date and
time for the entrance meeting and receive confirmation
of meeting.
FR-04.2.1-03 System shall enable the auditor to capture entrance M
interview results, findings on review of internal controls
and inspection of taxpayer’s premises,
FR-04.2.1-04 System shall enable team leader to review interview M
records. Once approved, system shall send interview
documentation to taxpayer/tax agent.
FR-04.2.1-05 System shall enable the taxpayer/tax agent to confirm M
receipt of interview documentation. System shall
receive and notify the auditor of the confirmed
interview documentation.
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2.2.4. Audit Execution
2.2.4.1. Desk Audit

(Mandatory
(M)/Preferred (P)
FR-04.3-01 The system shall enable auditor to gather evidences M
(data or documents) from internal and third-party
sources.
FR-04.3-02 System shall enable the taxpayer to upload supporting M
documents.
FR-04.3-03 The system shall enable the auditor to perform data M
analytics using business intelligence tools.
FR-04.3-04 The system shall enable the auditor to conduct desk M
audit using internal data, taxpayer history, third-party
data and documents uploaded by taxpayer following
standard audit procedures.
FR-04.3-05 The system shall enable auditor to prepare draft audit M
report and submit to team leader/process owner for
review and approval.
FR-04.3-06 The system shall enable the team leader to review and M
approve the desk audit report. If there is/are big
issue/s or finding, team leader submits
recommendation to follow-up with comprehensive
audit. If not, system shall send draft audit report to the
taxpayer.
FR-04.3-07 If there is big issue discovered in the audit process, M
system shall enable the audit team leader to update
the taxpayer’s risk profile.
FR-04.3-08 Tax audit director/process owner to review whether it M Configurable criteria to
needs to elevate to comprehensive audit or not. decide on escalating to
17
(Mandatory
(M)/Preferred (P)
comprehensive audit.
18
2.2.4.2. Comprehensive Audit
19
(Mandatory
(M)/Preferred (P)
FR-04.4-01 Assess eligibility of taxpayer for Computer Assisted M
Audit Tool/Technique. If taxpayer is eligible for CAAT,
system shall conduct automated audit.
FR-04.4-02 System shall have an embedded or complementary M
interoperating functionality/tool to perform computer
assisted audit and perform computer assisted audit.
FR-04.4-03 System shall enable the tax auditor to conduct audit M
assertion and verification. Audit assertion and
verification might involve balance sheet, income
statement, statement of cash flows, owner’s equity, etc
items.
FR-04.4-04 System shall enable the taxpayer to upload additional M
documents as if tax auditor requests for additional
documents.
FR-04.4-05 The system shall enable the auditor to send requests M
(query sheets) at any stage of the audit process to the
taxpayer. The taxpayer is expected to send the
requested documents and clarifications within a
preconfigured period of time, via email, phone call, in
person, or using other channel.
FR-04.4-06 The system shall enable the auditor to compare the M
auditee with similar taxpayer and Industry benchmark
to identify out of pattern tax declaration.
FR-04.4-07 The system shall support the auditor to request M
additional data from 3rd party and conduct third-party
data matching to check accuracy / credibility of tax
declaration.
FR-04.4-08 The system shall enable tax auditor conduct balance M
sheet components, expenditure or revenue testing.
FR-04.4-09 The system shall enable the tax auditor to dispose M
queries.
FR-04.4-10 The system shall enable the tax auditor to submit audit M
execution report to tax audit team leader and discuss
finding. If report is approved by team leader, system
shall enable the tax auditor to draft the audit report.
FR-04.4-11 System shall enable tax auditor to assess and M
interrogate taxpayer’s method of accounting and
reporting whether taxpayer is complying with
acceptable accounting and reporting like IFRS.
FR-04.4-12 System shall enable the auditor to conduct an audit M
trail of transactions on the ITAS system (if data is
available in ITAS) or in the system used by the
taxpayer as the case may be. Taxpayer data can also
be imported in a data template and the audit can be
run in the ITAS system.
FR-04.4-13 System shall enable the auditor to select and audit a M
sample of the taxpayer’s records and transactions on
the system used by the taxpayer or in MoR system if
transactions are coming using the e-invoicing solution
or other types of data templates. The criteria for
sampling may vary depending upon the audit case.
FR-04.4-14 The system shall perform automatic auditing based on M Business rule on the
predefined business rules and provide audit manual should
recommendations to be reviewed, amended and be approved and
approved by the tax auditors. institutionalize before
the procurement starts
20
(Mandatory
(M)/Preferred (P)
System shall automatically make a comparative
analysis of various ratios such as input/output and
profitability ratios. Cost and or expense ratios for
similar tax types and industry benchmarks.
FR-04.4-15 System shall enable auditor to select a sample of cost, M
expense and other records and transactions for
detailed audit analysis (such as employment income
taxes, depreciation expenses, and related items)
based on parameters as defined by the auditor
FR-04.4-16 System shall enable auditor to select revenue M
transactions for detailed audit analysis based on
parameters as defined by the auditor with automatic
comparison and reconciliation of purchases/imports,
production and inventory data
FR-04.4-17 System shall provide tools to assist with audit M
activities, including analysis of taxpayer accounting
records linking to e-invoicing applications, data
matching through links to other 3rd party data, and the
ability to work remotely from a taxpayer site via access
to taxpayer’s purchase, sales ledgers and all other
types of ledgers.
FR-04.4-18 System shall route the audit report and through the M
review and approval process until final approval is
obtained by the authorized official. The approvals
might be multiple level based on approval
limits/thresholds.
FR-04.4-19 System shall enable the process owner to send audit M
report to taxpayer/tax agent for review and acceptance
of the audit report within an approved period of time. If
taxpayer fails to raise objection within the approved
period of time, the tax intelligence and fraud
investigation process will be triggered.
If the taxpayer signs the audit report, the audit

completion process will start.
FR-04.4-20 The system shall facilitate sending alerts to the M
taxpayer on generation of audit report and shall
forward electronic copy of the audit report to the
taxpayer through email, SMS, or other channels of
communication to the taxpayers registered for
online/other services.
FR-04.4-21 The system shall facilitate printing of the audit report M
for the taxpayer for list of identified cases for mailing
the same to the corresponding taxpayer.
FR-04.4-22 The system shall facilitate recording the data on audit M
reports which have been returned as undelivered.
FR-04.4-23 The system shall allow users to generate a list of M
taxpayers being audited, and to see any reports
already sent to the taxpayer along with the date of the
report.
FR-04.4-24 The system shall facilitate storing the copies of letters M
issued to the taxpayer in the taxpayer record, which
shall be available for tax auditors for reviewing the
history of audit actions undertaken during the case
proceedings.
FR-04.4-25 The system shall maintain a history of audit actions M
undertaken for the taxpayer along with the details such
as date, assigned tax auditor allocated for audit action,
21
(Mandatory
(M)/Preferred (P)
status, outcome etc.
FR-04.4-25 The system shall allow users to e-mail the report or M
reminder for those taxpayers who have requested for
email communication.
FR-04.4-26 System shall enable taxpayer to review the audit M
report and accept or raise objection for internal review
against the notice within xx days (any other agreed
configurable number of days) from receipt of notice.
FR-04.4-27 During review assessment, if there is an indication of M
potential fraud, system shall enable team leader to
send feedback to investigation team for tax fraud and
sub process ’11. Intelligence and Tax Fraud
Investigation’ will be triggered. There should be clear
criteria to label cases as potential fraud
FR-04.4-28 Upon approval by the authorized official system shall M
send assessment notice to taxpayer.
FR-04.4-29 System shall receive confirmation by taxpayer for M

receipt of, audit report via electronic /signature
FR-04.4-30 The system shall support taxpayers operating in M
multiple zones to be audited at the region level based
on consolidated report.
FR-04.4-31 The system shall be able to calculate aggregate tax of M
taxpayers operating in multiple zones of a region.
FR-04.4-32 The system shall support capturing audit findings, M

generating segregated audit reports for taxpayers
operating in multiple zones of a region
FR-04.4-33 Generate standard management reports including M

aggregate number of audit cases completed by tax
center/ segment compared to plan, aggregate amount
of assessment with details of principal, penalties and
interest; analyzed by tax center/segment and also
economic/business sector,
Reports showing aggregate amount of audit

assessments issued, amount reduced via review,
appeal to Tax Appeal Commission, and Courts and net
amount of assessment confirmed at each stage
showing principal, penalty and interest and grouped by
tax center/segment.
Other type of reports that should be included: audit

status report, productivity report (indicating
performance of Officers), assessments by category,
audit visits report, taxpayer visit history, disputed
assessments, cases referred to investigations,
taxpayer’s performance versus selection criteria,
changes in audit risk Levels per taxpayer, etc.
Audit yield based on amounts confirmed by Appeal

Commission and by Courts separately compared to
total taxes declared and paid by those taxpayers.
System shall also provide report generation tools for

MoR data analytics staff to generate other reports from
database as required.
22
2.2.4.3. Transfer Pricing Audit
23
(Mandatory
(M)/Preferred (P)
FR-04.5-01 System shall create Risk Based Transfer Pricing Case M
Selection.
FR-04.5-02 System shall automatically assign case to transfer M

pricing audit team.
FR-04.5-03 System shall enable stakeholders to submit request for M

possible transfer pricing case.
FR-04.5-04 System shall enable transfer pricing audit process M
owner to review strength of transfer pricing referral
cases.
FR-04.5-05 System shall enable transfer pricing audit team to M
conduct detailed risk assessment as per manual.
FR-04.5-06 System shall enable taxpayer to submit M
information/evidence.
FR-04.5-07 System shall enable the transfer pricing audit process M
owner to develop initial working hypotheses and
business case for transfer pricing audit (Amount of
Revenue at Risk).
FR-04.5-08 System shall enable the review committee to review M
transfer pricing case in planning meeting. As the
review committee decide to continue, the ‘Audit
Planning and Programming’ will be triggered.
FR-04.5-09 System shall enable tax auditor to assess and M
reporting.
FR-04.5-10 System shall enable the auditor to conduct an audit M
trail of transactions. If e-invoicing is functional, the
audit trail can be done in the MoR system and if it is
not functional, it can be done on Cash Register
Machine for the sales data. Others can be done
manually by accessing the taxpayer system.
FR-04.5-11 System shall enable the auditor to select and audit a M
sample of the taxpayer’s records and transactions.
FR-04.5-12 System shall automatically make a comparative M

profitability ratios. Cost and/or expense ratios for
FR-04.5-13 System shall automatically select cost and expense M
types for detailed audit analysis based on parameters
as defined by the auditor
FR-04.5-14 System shall enable auditor to perform comparison of M
similar tax type and industry benchmarks.
FR-04.5-15 System shall enable auditor to assess if the case has M
potential issues of transfer pricing due to cross border
transaction.
FR-04.5-16 System shall allow uploading prices of selected M
products imported by competing companies/producers
and use these for a preliminary comparative analysis
to provide indicative transfer pricing information for
further analysis
System shall interface with external price databases

(customs valuation database) match importation price
used for a product by the taxpayer from a related
foreign company and produce transfer pricing
discrepancy report for the auditor to validate and use
to do transfer pricing audit
24
(Mandatory
(M)/Preferred (P)
FR-04.5-17 System shall enable auditor to obtain approval for M
request for information and to upload information
obtained to the system.
FR-04.5-18 System shall provide automatic transfer pricing M
analysis based on parameters the auditor may provide
using data available in the system and 3 rd party
sources
FR-04.5-19 System shall enable auditor to determine and use the M
transfer pricing methods linking to international market
databases subject to the proclamations and directives.
FR-04.5-20 System shall enable auditor to draft audit report, M
review with taxpayer or agent in an exit conference,
amend the report and Assessment Notice and submit
to audit team leader for review.
FR-04.5-21 System shall route the audit report through the review M
and approval process until final approval is obtained
by the authorized official.
FR-04.5-22 System shall enable the process owner to send audit M
report to taxpayer/tax agent for signoff if he/she agrees
with the audit report within an approved period of time.
If taxpayer fails to raise objection within the approved
period of time, the tax intelligence and fraud
investigation process will be triggered.

FR-04.5-23 The system shall generate an audit notice for the M
taxpayers using the standard formats/MoR formats
and updating the format with relevant details of
respective taxpayers.
FR-04.5-24 While generation of notice letters, the system shall M
update variables based on the information applicable
for each letter.
FR-04.5-25 The system shall generate a unique identification M
number/reference number for the audit notice for
purpose of tracking the notice.
taxpayer on generation of audit notice and shall
forward electronic copy of the audit notice to the
taxpayer through email or other medium of
FR-04.5-27 The system shall facilitate printing of the audit notice M
for the taxpayer or batch printing in case of multiple
audit notices for list of identified cases for mailing the
same to the corresponding taxpayer.
notices which have been returned as undelivered.
An action plan shalkl shall be devised and routed to a
designated MOoR team for taxpayers on this list.
taxpayers being audited, and to see any notices
notice.
FR-04.5-30 The system shall facilitate storing the copies of M
notices/letters issued to the taxpayer in the taxpayer
record, which shall be available for tax auditors for
reviewing the history of audit actions undertaken
25
(Mandatory
(M)/Preferred (P)
during the case proceedings.
FR-04.5-32 The system shall allow users to e-mail the notice or M
FR-04.5-33 System shall enable taxpayer to review the M
assessment notice and accept or raise objection for
internal review against the notice within 30 days (to be
configurable) from receipt of Notice
sub process ’11. Intelligence and Tax Fraud
Investigation’ will be triggered.

receipt of audit report and assessment notice via
electronic /signature
to taxpayer’s purchase and sales ledgers
economic/business sector.

tax center/segment

changes in audit risk Levels per taxpayer, etc

total taxes declared and paid by those taxpayers
26
2.2.4.4. Transfer Pricing Audit Planning and Programming

(Mandatory
(M)/Preferred (P)
FR-04.5.1-01 System shall enable the transfer pricing audit team to M
research and record the materiality (objective, scope,
context and resources needed).
research on taxpayer’s industry.
FR-04.5.1-03 System shall enable transfer pricing audit team to M
research and record audit sampling method.
FR-04.5.1-04 System shall enable transfer pricing audit process M
owner to review strength of transfer pricing referral
cases.
prepare the audit plan and programing and submit to
the process owner for review and approval.
FR-04.5.1-06 System shall enable the transfer pricing audit process M
owner to review the audit plan and programing and
approve. Upon approval, system shall notify the
transfer pricing audit team. If initial meeting is
required, system shall trigger ‘Entry Conference with
Taxpayer’ sub process.
owner to review results of audit preparation.
27
2.2.4.5. Transfer Pricing Audit Execution

(Mandatory
(M)/Preferred (P)
issue additional information and document request for
factual development, including requests for interviews,
plant tours and site visits.
FR-04.5.2-02 System shall enable the taxpayer to submit additional M
information/evidence via interviews, plant tours and
site visits.
provide the draft fact statement and notify the
taxpayer.
FR-04.5.2-04 System shall enable the taxpayer to review fact of M
statement.
FR-04.5.2-05 System shall enable the taxpayer to submit
explanation/evidence of differences.
FR-04.5.2-06 System shall support the transfer pricing audit team to M
prepare discussion with the taxpayer.
select appropriate transfer pricing audit method.
research and record the arm’s length price/profit and
range.
draft audit report and submit transfer pricing audit
process owner for approval.
FR-04.5.2-10 System shall enable transfer pricing process owner to M
review the audit report and approve it.
28
(Mandatory
(M)/Preferred (P)
owner to review results of audit preparation.
2.2.4.6. Issue Audit

(Mandatory
(M)/Preferred (P)
FR-04.6-01 System shall enable tax auditor to send notification to M
auditee, if notification is required.
FR-04.6-02 System shall enable auditor to select M

transactions/areas based on identified issue –
noncompliance key areas or tax types.
FR-04.6-03 System shall enable the auditor to gather evidences M
from internal and third-party sources on selected
transactions.
System shall also enable the auditee to upload

additional documents as required.
FR-04.6-04 System shall enable auditor to capture findings of field M
visit (if field visit is required).
29
(Mandatory
(M)/Preferred (P)
FR-04.6-05 System shall enable auditor to perform data analytics M
using BI tools.
FR-04.6-06 System shall enable auditor to draft audit report and M

submit to team leader for review and approval. If
report is not approved, system shall enable auditor to
revise the reports as per comments from the team
leader.
FR-04.6-07 If report is approved by team leader, system shall M
forward the report to process owner for further review
and approval. If the report is rejected by process
owner, system shall enable the auditor to revise the
report as per rejection comments.
FR-04.6-08 If report is approved by process owner, system shall M
forward the report to director to review and
recommend follow-up action. If no follow-up action is
required, system shall generate the audit report.
If there is sign of potential fraud, the intelligence and

fraud investigation process shall be triggered.
If comprehensive audit is required, the system shall

trigger comprehensive audit.
30
2.2.5. Audit Completion
This sub-section section applies to all types of audits.
ID Requirement Description Priority (Mandatory Remark

(M)/Preferred (P)
FR-04.7-01 System shall enable auditor to prepare, index and M

store the audit working papers to facilitate retrieval of
working papers as required and support the approval
process.
FR-04.7-02 System shall enable auditor to prepare draft audit M
report and set agenda for exit conference and submit
to team leader for review and approval.
FR-04.7-03 System shall enable team leader to review and M
approve draft audit report and agenda and notify
taxpayer to confirm attendance and sign the audit
report.
FR-04.7-04 The system shall support online or e-calendar facility M
or scheduling tool for selection of date and time for
scheduling a discussion/exit conference with the
taxpayer.
FR-04.7-05 The system shall provide a facility for the auditor to M
record the exit conference date and time in the
system.
FR-04.7-06 The system shall allow users to define (and modify M
under version control) a standard letter template for
generating and printing exit conference/interview
request letters to be sent to the taxpayers to be
interviewed.
FR-04.7-07 Printing of request letter for interview/exit conference M
to be performed as a desktop printing job, or bulk
31
(M)/Preferred (P)
printing job.
FR-04.7-08 The system shall maintain the status of the interview M
/exit conferenceas pending after request letter has
been printed.
FR-04.7-09 The system shall facilitate alerts to the taxpayer on the M
scheduled interview/exit conference date and time.
FR-04.7-10 System shall support the taxpayer to request for M

change in the scheduled exit conference/interview
date and time or to confirm their availability for the
scheduled meeting.
FR-04.7-11 System shall facilitate the tax authority to make M
changes to the exit conference/interview schedule as
per request of taxpayer or to deny the request.
FR-04.7-12 System shall enable the auditor to make exit M
conference/nterview notes and record necessary
details in the system based on the discussions held
with the taxpayer including the facility for uploading
any supporting documents
FR-04.7-13 The system shall provide the facility to print the M
recorded exit conference/ interview notes on a
standard letterhead using a print template stored in the
system (with provision for obtaining signature from
taxpayer) as a desktop printing job.
FR-04.7-14 The system shall provide a facility to scan the exit M
conference/interview letter (even those made on
physical forms) and link it with relevant audit case file
FR-04.7-15 The system shall update the status of the exit M
conference/interview after letter has been printed,
scanned and linked to relevant audit case
FR-04.7-16 System shall have the ability to provide online inquiry M
and other forms of reporting on:
 Status of an audit case
 Actions of the auditor
 Auditors findings
 Audit adjustments recorded
 Audit yield
 Backlog
 View notes from auditor
Ability for auditors to download their work lists and the

associated case data into their laptops
FR-04.7-17 The system shall enable the auditors to record audit M
working papers, which include documents collected
from taxpayers, 3rd parties, and uploaded, findings,
analysis, adjustments and calculations made and any
relevant, information received from taxpayers, etc.
FR-04.7-18 The system shall support the auditors in obtaining an M
integrated view of taxpayer compliance history,
liabilities, registration information, previous returns
filed, records of previous recovery and enforcement
action, etc.
FR-04.7-19 The system shall facilitate in retrieving transaction M
information from the tax returns submitted by the
system and obtained from external systems such as
the customs department IT and the Ministry of
Finance, IT, banks, etc.
FR-04.7-20 As appropriate to the case: M
 The system shall make automatic matching of
32
(M)/Preferred (P)
Payroll tax salaries and wages expenses data for

the 12 months of the tax year against the payroll
expense deducted in the profit and loss account in
the case of profit tax audit.
 System should reconcile the Payroll tax paid for
the tax year against the calculation of the tax on
the 12 months aggregate salaries and wages
shown as expense in the profit and loss account
submitted as part of the profit tax return, showing
any discrepancies.
 The system shall make automatic matching of 12
months Gross sales as per VAT returns (and
sales summary from Z report of cash register
machine) and the Gross sales in the Profit tax
returns for the same year and generate
discrepancy report for the auditor to validate.
FR-04.7-21 The system shall facilitate the tax officers in preparing M
the audit assessment notices using pre-defined
templates. The system shall automatically populate the
templates with the relevant taxpayer and case
information.
FR-04.7-22 The system shall have a workflow-based approval M
system for approving the audit assessments of the
audit officers in the system.
FR-04.7-23 The system shall have the facility to print and issue the M
audit notices with a unique identification number linked
to the audit case.
FR-04.7-22 The system shall also support the audit officers in M
preparing estimated assessments based on their best
judgment. The system shall mandate the audit team
leader/process owner to review and approve the
estimated assessment.
Upon approval of the assessment notice, the system

shall adjust the taxpayer account If there is an
indication of potential fraud, the system shall enable
the process owner to forward the case for fraud
investigation.
The system shall maintain an audit trail of any

modifications made to the estimated assessment.
FR-04.7-23 The system shall allow the printing and issuing of the M
audit assessment notice to the taxpayer, through
online and physical channels.
The system shall enable the auditor to amend

assessment notices as additional data/evidences are
obtained or auditors discover errors after assessment
notice is issued.
FR-04.7-24 The system shall generate a unique identification M
number/reference number for the audit notice for
purpose of tracking the notice.
taxpayer on generation of audit notice and shall
forward electronic copy of the audit notice to the
taxpayer through email or other medium of
FR-04.7-26 The system shall facilitate printing of the audit notice M
33
(M)/Preferred (P)
for the taxpayer or batch printing in case of multiple

audit notices for list of identified cases for mailing the
same to the corresponding taxpayer.
notices which have been returned as undelivered and
trigger alternative outreach measures such as sending
by post, affixing the notices in the premises of the
taxpayer, publishing in the newspapers, etc
taxpayers being audited, and to see any notices
notice.
FR-04.7-29 The system shall facilitate in storing the copies of M
notices/letters issued to the taxpayer in the taxpayer
record, which shall be available for tax auditors for
reviewing the history of audit actions undertaken
during the case proceedings.
FR-04.7-31 The system shall allow users to e-mail the notice or M
FR-04.7-32 After assessment notice is delivered, system shall M
enable taxpayer to review the assessment notice and
accept or raise objection for internal review against the
notice within 30 days (configurable) from receipt of
Notice
FR-04.7-33 During audit, if there is an indication of potential fraud, M
system shall enable team leader to send case to
investigation team for tax fraud and sub process ’11.
Intelligence and Tax Fraud Investigation’ will be
triggered.

receipt of, audit report and assessment via
electronic /signature
to taxpayer’s purchase and sales ledgers

tax center/segment
34
(M)/Preferred (P)

changes in audit risk Levels per taxpayer, etc

total taxes declared and paid by those taxpayers
FR-04.7-39 The system shall maintain a record of all changes to M
taxpayer records and all necessary documentation for
audit purposes.
FR-04.7-40 The system shall facilitate the auditors in specifying M
the case status (pending/on-going/closed) and allow
the supervisors to monitor the same.
FR-04.7-41 The system shall maintain a history of the entire audit M
case file which is accessible based on authorization.
2.2.6. Audit Support and Follow-Up

2.2.6.1 Developing Tax Audit Procedure

(M)/Preferred (P)
Note: This is a manual process not supported by

ITAS.
35
(M)/Preferred (P)
Excepting that: approved changes may be reflected in

standard workflow templates, contents and generation
of automated fact dossiers, standard letters templates,
etc., that are described elsewhere in this BFR.
2.2.6.2 National Audit Plan-Monitoring and Support

(M)/Preferred (P)

ITAS.
Excepting: communication of revisions to affected
parties who would then perform necessary changes for
audit case selection including risk selection criteria,
and case type / load assessments using functions
described elsewhere in this BFR.
2.2.6.3 Capacity Building for Auditors
36
(M)/Preferred (P)

ITAS.
Excepting: updates to staffing skill / capacities,
updates to education records as described in this and
other BFRs.
2.2.7. Audit Quality Assurance
The quality assurance processes apply to all types of audits.
2.2.7.1. Prepare Audit Quality Procedure

(M)/Preferred (P)

ITAS.
37
2.2.7.2. Conduct Audit Quality Assurance Review

(M)/Preferred (P)
FR-04.9.2-01 System shall periodically (based on agreed time M

period) select audit cases completed from the system
for quality assurance purpose. The appropriate
sampling method/s is/are expected to be configured in
the system.
FR-04.9.2-02 System shall automatically assign audit cases to the M
quality assurance team based on predefined criteria.
FR-04.9.2-03 System shall enable the audit quality assurance team M
to prepare audit quality review action plan and submit
to audit team leader/process owner for review and
approval.
FR-04.9.2-04 System shall enable audit team to review the audit M
cases and determine action.
FR-04.9.2-05 System shall enable team leader/process owner to M
review the audit quality review execution and give
approval. If approved, system shall send notification
to the audit quality assurance team to generate draft
quality review report and submit to team
38
(M)/Preferred (P)
leader/process owner for approval.

FR-04.9.2-06 System shall enable audit team leader/process owner M
to review the audit quality assurance report and
recommendations.
FR-04.9.2-07 System shall support the quality assurance team to M
prepare draft agenda for exit conference and submit to
team leader/process owner for approval.
FR-04.9.2-08 System shall support the audit team to prepare draft M
agenda for exit conference and submit to team
leader/process owner for approval.
FR-04.9.2-09 System shall enable team leader/process owner to M
review the draft agenda for exit conference and
approve. If approved, the quality assurance team shall
schedule, send the schedule and conduct the
conference.
FR-04.9.2-10 Based on inputs from the exit conference, system shall M
enable the quality assurance team to adjust the quality
assurance report and submit to team leader/process
FR-04.9.2-11 Upon approval by the team leader/process owner, M
system team leader/process owner determine follow-
up action.
FR-04.9.2-12 Based on determined follow-up action: M
i. System shall enable the quality assurance
team to make procedural adjustment as per
recommendation.
ii. Notify pertinent stakeholders for
appropriate follow-up actions.
iii. team leader/process owner takes
disciplinary action.
FR-04.9.2-13 System enables audit team leader/process owner to M
check whether the audit team addressed
recommendations of quality assurance team or not.
39
2.2.8. Joint Audit
2.2.8.1. Joint Audit Case Selection and Assignment

(Mandatory
(M)/Preferred
(P)
FR-04.10.1-01 System shall be able to automatically select joint M
audit cases selected on risk bases by the Risk
Directorate to Audit Directorate/branches by order of
their risk ranking, by branch and or taxpayer
segment
The system shall allow users to define and configure

the audit case types, which includes the scope and
coverage of the audit cases, the estimated duration
for resolution of the audit cases, etc.
System shall conduct financial analysis of return and

other data to automatically select cases for audit
with support from the risk analysis component.
FR-04.10.1-02 System shall also support stakeholders to identify M
and submit requests for joint audit cases
FR-04.10.1-03 System shall enable the joint audit committee to M
receive selected audit cases and to determine
efficacy/viability of conducting joint audit.
research and record related issues to the joint audit.
FR-04.10.1-05 System shall generate and assign a case number M

for each audit case and enable the joint audit
40
(Mandatory
(M)/Preferred
(P)
committee to assign members to the joint audit
team. System shall also have automatic case
assignment functionality.
FR-04.10.1-06 System shall enable the joint audit team to conduct M
detailed risk assessment.
assign joint audit team leader for each joint audit
case. System shall also have automatic case
assignment functionality.
2.2.8.2. Joint Audit Planning and Programming

Mandatory
(M)/Preferred (P)
FR-04.10.2-01 The system shall enable the auditor to evaluate the M
case assigned to him/her based on information
available in the data warehouse.
FR-04.10.2-02 The system shall enable the auditor to analyze the M
taxpayer file and case dossier. If additional supporting
documents are required from the taxpayer, system
shall enable the auditor to request additional
information using the system.
System shall enable taxpayer to upload additional

information as requested by the auditor.
FR-04.10.2-03 The system shall present taxpayer information, M
taxpayer filling, payment, audit and other detailed
information. In addition, the system shall present the
risk engine criteria that that has led the taxpayer to be
41
Mandatory
(M)/Preferred (P)
selected with drill down capability.
The system shall enable the tax auditor to review the

taxpayer’s file and record findings on previous audit, if
not already in the system. This involves reviewing and
documenting the specific areas of risk identified by
analyzing the taxpayer returns and financial
statements identifying the areas the audit should focus
on.
FR-04.10.2-04 The system shall enable the auditor to determine the M

materiality (objective, scope, context and resource
needed) for the audit.
FR-04.10.2-05 The system shall enable the auditor to perform M
research on the taxpayer’s industry. This might
involve computing various ratios, with comparison
across sectors/industries to enhance the auditor’s
ability to identify issues the audit should look at.
FR-04.10.2-06 The system shall enable the auditor to determine the M
audit sampling method. System shall support various
scientific sampling methods including stratified
sampling, random sampling, systematic sampling etc
as per the requirements of the Ministry.
FR-04.10.2-07 The system shall prepopulate the taxpayer basic M
information for the auditor. Audit plan types, audit
System shall enable the tax auditor to prepare the types, audit steps
audit plan specific for the audit case specifying audit should be configurable
segments and the audit program to be followed for
each type of tax and tax period as appropriate. Upon
completion, system shall enable the tax auditor to
submit the plan for tax audit team leader or process
The system shall also provide a functionality for

auditors to set up audit targets auditor-wise based on
the complexity of the audit case and the number of
cases assigned.
The audit plan contents will be agreed during

requirement validation
The system shall support various modes of audit case

work including desk audits, field audits, issue based
audits, comprehensive audits and investigations.
FR-04.10.2-08 Upon team leader’s/process owner’s approval, system M

shall notify the tax auditor about approval of the audit
plan so that auditor identifies information/evidences
required from the taxpayer.
FR-04.10.2-09 If initial meeting with taxpayer is required, the system M
shall enable the auditor to trigger an initial meeting
following sub process ’Entry Conference with the
Taxpayer’ will be triggered.
FR-04.10.2-10 System shall enable the tax auditor to upload analysis M Audit preparation
made on the audit preparations. Documents vouched, report is configurable
evidences and findings obtained from his/her personal
computer with adequate security of data, storing
complete audit working papers for future reference.
42
Mandatory
(M)/Preferred (P)
Once analysis is completed, the system shall allow the
auditor to prepare audit preparation report and the
report be documented.
FR-04.10.2-11 System shall enable tax audit team leader and other M
authorized persons to review results of the audit,
electronically sign and route to the next hierarchy until
the final authorized person approves or decides on the
audit case electronically.
FR-04.10.2-12 If there any potentially fraudulent activity is traced at M
this stage, system shall trigger ‘Tax Intelligence and
Fraud Investigation’ sub process.
2.2.8.3. Execute Joint Audit
43
(Mandatory
(M)/Preferred (P)
FR-04.4-01 Assess eligibility of taxpayer for Computer Assisted M
Audit Tool/Technique. If taxpayer is eligible for CAAT,
system shall conduct automated audit.
FR-04.4-02 System shall have an embedded or complementary M
interoperating functionality/tool to perform computer
assisted audit.
FR-04.4-03 System shall enable the joint audit team to conduct M
audit assertion and verification. Audit assertion and
verification might involve balance sheet, income
statement, statement of cash flows, owner’s equity, etc
items.
FR-04.4-04 System shall enable the taxpayer to upload additional M
documents as if tax auditor requests for additional
documents.
FR-04.4-05 The system shall enable the joint audit team to send M
requests (query sheets) at any stage of the audit
process to the taxpayer. The taxpayer is expected to
send the requested documents and clarifications within
a preconfigured period of time
via email, phone call, in person, or using other
channels.
FR-04.4-06 The system shall enable the joint audit team to M
compare the auditee with similar taxpayer and industry
benchmark to identify out of pattern tax declaration.
FR-04.4-07 The system shall support the joint audit team to M
request additional data from 3rd party and conduct
third-party data matching to check accuracy /
credibility of tax declaration.
FR-04.4-08 The system shall enable joint audit team to conduct M
balance sheet components, expenditure or revenue
testing.
FR-04.4-09 The system shall enable the joint audit team to M
dispose queries.
FR-04.4-10 The system shall enable the joint audit team to submit M
audit execution report to tax audit team leader and
discuss finding. If report is approved by team leader,
system shall enable the tax auditor to draft the audit
report.
FR-04.4-11 System shall enable the joint audit team to assess and M
reporting whether taxpayer is complying with
acceptable accounting and reporting like IFRS.
FR-04.4-12 System shall enable the joint audit team to conduct an M
audit trail of transactions on the ITAS system (if data is
available in ITAS) or in the system used by the
taxpayer as the case may be. Taxpayer data can also
be imported in a data template and the audit can be
run in the ITAS system.
FR-04.4-13 System shall enable the joint audit team to select and M
audit a sample of the taxpayer’s records and
transactions on the system used by the taxpayer or in
MoR system if transactions are coming using the e-
invoicing solution or other types of data templates.
The criteria for sampling may vary depending upon the
audit case.
FR-04.4-14 The system shall perform automatic auditing based on M Business rule on the
predefined business rules and provides audit manual should
recommendations to be reviewed, amended and be approved and
44
(Mandatory
(M)/Preferred (P)
approved by the tax auditors. institutionalize before
the procurement starts
System shall automatically make a comparative
profitability ratios. Cost and or expense ratios for
FR-04.4-15 System shall enable the joint audit team to select a M
sample of cost, expense and other records and
transactions for detailed audit analysis (such as
employment income taxes, depreciation expenses,
and related items) based on parameters as defined by
the auditor
FR-04.4-16 System shall enable the joint audit team to select M
revenue transactions for detailed audit analysis based
on parameters as defined by the auditor with
automatic comparison and reconciliation of
purchases/imports, production and inventory data
to taxpayer’s purchase, sales ledgers and all other
types of ledgers.
FR-04.4-18 System shall route the audit report and through the M
review and approval process until final approval is
obtained by the authorized official. The approvals
might be multiple level based on approval
limits/thresholds.
FR-04.4-19 System shall enable the joint audit committee to send M
audit report to taxpayer/tax agent for review and
acceptance of the audit report within an approved
period of time. If taxpayer fails to raise objection within
the approved period of time, the tax intelligence and
fraud investigation process will be triggered.

taxpayer on generation of audit report and shall
forward electronic copy of the audit report to the
taxpayer through email, SMS, or other channels of
FR-04.4-21 The system shall facilitate printing of the audit report M
for the taxpayer for list of identified cases for mailing
the same to the corresponding taxpayer.
reports which have been returned as undelivered.
taxpayers being audited, and to see any reports
report.
FR-04.4-24 The system shall facilitate storing the copies of letters M
issued to the taxpayer in the taxpayer record, which
shall be available for tax auditors for reviewing the
history of audit actions undertaken during the case
proceedings.
45
(Mandatory
(M)/Preferred (P)
FR-04.4-25 The system shall allow users to e-mail the report or M
FR-04.4-26 System shall enable taxpayer to review the audit M
report and accept or raise objection for internal review
against the notice within xx days (any other agreed
configurable number of days) from receipt of notice.
sub process ’Intelligence and Tax Fraud Investigation’
will be triggered. There should be clear criteria to label
cases as potential fraud

receipt of, audit report via electronic /signature
FR-04.4-30 The system shall support taxpayers operating in M
multiple zones to be audited at the region level based
on consolidated report.
FR-04.4-31 The system shall be able to calculate aggregate tax of M
taxpayers operating in multiple zones of a region.
FR-04.4-32 The system shall support capturing audit findings, M

generating segregated audit reports for taxpayers
operating in multiple zones of a region


tax center/segment.
Other type of reports that could be considered include

audit status report, productivity report (indicating
changes in audit risk Levels per taxpayer, etc.

total taxes declared and paid by those taxpayers.
46
(Mandatory
(M)/Preferred (P)
2.2.8.4. Complete the Joint Audit

(M)/Preferred (P)
Requirements under sub process ‘Audit Completion’

apply to this process.
47
3. Annexures
Annex 1. List of Acronyms
Abbreviations/
Definition
Acronym
BPT Business Process Transformation
BPMN Business Process Modeling and Notation
BRD Business Requirement Document
FRD Functional Requirement Document
ITAS Integrated Tax Administration System
MoR Ministry of Revenues
TTO Tax Transformation Office
Annex 2. Requirement Prioritization Convention

Value Rating Description
1 Mandatory This requirement is critical to the success of the project. The project will
not be possible without this requirement.
2 Preferred This requirement is somewhat important, as it provides some value but
the process can proceed without it.
Annex 3. Glossary of Terms

[If needed, identify and define any terms that may be unfamiliar to readers, including
terms that are unique to the organization, the technology to be employed, or the
standards in use.]
Annex 4. Related Reference Documents

[Provide a list of documents or web pages, including links, which are referenced in the
BRD/FRD.]
48

Tax Audit BFR V6.0-16July2021

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Ministry of Revenues

Version Date Revised By Reason for change

1.0 November-2020 BPT Team Drafted the document

1.1 November-2020 TTO Leadership Review comments

1.2 November-2020 BPT Team Review comments

1.3 December-2020 TTO Leadership Review comments

1.4 December-2020 IMF Team Review comments

1.5 December-2020 Data/IT Team Review comments

1.6 February-2020 BPT Team Revised the document

2.0 March-2021 BPT Team Revised as per WSTs comments

3.0 March-2021 BPT Team Revised the document and formatting

5.0 June-2021 TTO Team Revised as per internal alignment inputs

Approver Name Role Signature Date

Ato Berhanu Abebe Director, Tax Audit Directorate

 High level of manual processing;

1.2. Purpose of the Document

2.1. Business Requirement

a. Case Selection, Assignment and Initial Meeting (Audit Planning)

b. Audit Execution (Desk, Comprehensive, Transfer Pricing, Issue Audits)

d. Audit Quality Assurance

e. Joint Audit (Tax audit and PCA)

f. Audit Case Management system

2.2. Functional Requirement

ID Requirement Description Priority Remark

FR-04.0-05 As the audit director approves the plan, system shall M

2.2.2 Case Selection and Assignment

ID Requirement Description Priority Remark

The system shall allow process owner to view cases

The system shall allow users to define and configure

System shall generate list of auditable cases based

 Match taxpayer data with reliable third-party

The system shall treat every audit case as part of a

There shall be standard templates for workflows per

Each specific case would contain an (electronic)

The system shall allow capturing details of each

System shall automatically link each audit case to the

System shall allow making changes to audit start and

FR-04.1-09 System shall make available an audit Case M

System shall enable the auditor to record work done

System shall enable the auditor to record work done

System shall automatically send case to Intelligence

2.2.3. Audit Case Planning and Programming

ID Requirement Description Priority Remark

System shall enable taxpayer to upload additional

The system shall enable the tax auditor to review the

FR-04.2-04 The system shall enable the auditor to determine the M

The system shall also provide a functionality for

The audit plan contents will be agreed during

The system shall support various modes of audit case

FR-04.2-08 Upon team leader’s/process owner’s approval, system M

Once analysis is completed, the system shall allow the

2.2.3.1. Entry Conference with Taxpayer

The system shall support booking interview rooms.

The system shall prompt the auditor about upcoming /

2.2.4.1. Desk Audit

ID Requirement Description Priority Remark

If the taxpayer signs the audit report, the audit

FR-04.4-29 System shall receive confirmation by taxpayer for M

FR-04.4-32 The system shall support capturing audit findings, M

FR-04.4-33 Generate standard management reports including M

Reports showing aggregate amount of audit

Other type of reports that should be included: audit

Audit yield based on amounts confirmed by Appeal