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					The Annual Meeting of the Representatives of
         the Nordic and Baltic SAI’s
     Lithuania, Vilnius, September, 2004



            WORKING GROUP

        REVENUE AUDIT
      JOINT/ SIMULTANEOUS AUDITING OF STATE
       REVENUE / COOPERATION BETWEEN TAX
     ADMINISTRATORS IN THE FIELD OF COMBATING
              VALUE ADDED TAX FRAUD




Presentation of A. Juozulynas, the NAO of Lithuania
   From Draft Resolution on Good Co-operation
 Practice Guide (2004) prepared by Joint Working
Group on Audit Activities of SAI’s of the Central and
Eastern European Countries, Cyprus, Malta, Turkey.


 ● Recognition of the usefulness of joint audits as a
  way of developing and implementing new audit
  methods and techniques and the value of small-
   scale, concrete co-operation on specific audit
                     activities
           EXTERNAL FORCES FOR
        JOINT/SIMULTANEOUS AUDIT

• EU enlargement, new forms of VAT fraud
• Globalization
• Fiscal implications (loss of significant state
  revenue)
• Need to improve public governance
    INTERNAL FORCES FOR JOINT/
        SIMULTANEOUS AUDIT

• Need to strengthen capacity and
  professional development of SAI’s
• Need to share skills and experience
• Need to recognize and learn from the
  different audit methods in other SAI’s
          PROPOSED CASE
 COOPERATION BETWEEN TAX
 ADMINISTRATORS IN THE FIELD OF
 COMBATING VALUE ADDED TAX FRAUD

Affected by:
- EU enlargement
- New types of taxation
- New types of fraud,
  VAT FRAUD IN INTRA-COMMUNITY TRADE

What’s new in the area of VAT from
 perspective of new Member states:

VAT is not paid on importation to the
 Treasury. The importer puts the input VAT
 and the output VAT in VAT return.
VAT FRAUD SCHEME IN INTRA-COMMUNITY
              TRADE
   EXTEND OF VAT FRAUD            - TAX LOSSES
• Up to 10 % of VAT revenue
• In terms of Lithuanian Budget it would be 110
  millions euro a year
• In some Member states it would be up to 12
  billion euro
• Increasing tendency
                   CONTRA-MEASURES
     USED BY TAX AUTHORITIES INTERNATIONALY
■ Cooperation between Member states
■ Exchange of information:
-Direct contacts
-Request for administrative enquires
-Fast exchange of basic information on
request (per fax)
-Automatic exchange of information on
missing traders
                   CONTRA-MEASURES
     USED BY TAX AUTHORITIES INTERNATIONALY
■ Cooperation between member states
■ Exchange of information:
-Direct contacts
-Request for administrative enquires
-Fast exchange of basic information on
request (per fax)
-Automatic exchange of information on
missing traders
                         TIME DISCREPENCY




                                    VAT refund after 1 moth
Information after 3 months
                  INTENSITY
• Statistical data of first half of 2004 Lithuania:
- 42 % of VAT receipts are refunded back or
  transferred to cover other tax liabilities – 385
  million euro a half year
- 85 thousand requests to pay back VAT excess
  or trasfer it to other taxes
           JOINT AUDIT VERSUS
           SIMULTANEOUS AUDIT
Joint audit – where key decisions are shared,
  work is done by one audit team and one
  report is prepared for presentation to each
  respective Parliament or governing body
Simultaneous audit – an audit where key
  decisions are shared, work is done by
  national audit teams and national reports
  are prepared for presentation to national
  respective Parliament or governing body by
  national teams
          A SUCCESSFUL JOINT/
         SIMULTANEOUS AUDIT - 1

• To select an audit area of substance and
  importance.
• To develop together clear, measurable
  and achievable project objectives and
  plans for the audit activity, based on a
  shared understanding.
• Try and select an audit that has a high
  degree of good likely results.
            A SUCCESSFUL JOINT/
           SIMULTANEOUS AUDIT - 2
• As possible to use external expert (s) with
  considerable experience of joint/
  simultaneous audit and technical
  assistance in reviewing progress audit
• To hold internal workshops to provide
  regular feedback at key stages
  of audit (Planning, Fieldwork,
  Review, Reporting)
            A SUCCESSFUL JOINT/
          SIMULTANEOUS AUDIT – 3

• The role and function of the audit team
  should be clear and well understood from
  start by all involved in the activity
• Communication within the audit team should
  be effective and regular and the approach
  should be sufficiently flexible to take on board
  any modification needed
              RESULTS
 OF JOINT/ SIMULTANEOUS AUDIT - 1


• Strengthening the capacity and
  professional development of SAI’s
• Sharing of skills and experience
• Passing to new external environment (EU
  enlargement, new forms of VAT fraud,
  globalization)
              RESULTS
 OF JOINT/ SIMULTANEOUS AUDIT - 2

• Information which is obtained in such
  joint activity would not normally be
  available in the course of purely
  domestic audit, and can provide
  additional assurance that SAI’s are
  performing their duties in an effective
  and wise way.
             RESULTS
OF JOINT/ SIMULTANEOUS AUDIT - 3

• Support of improvement of public
  governance
• Value Added: fiscal implication (gain of
  state revenue)
               RESULTS
  OF JOINT/ SIMULTANEOUS AUDIT - 4

• Joint/ simultaneous audit –a rare
  opportunity for the SAI to demonstrate
  clearly the changes being made and the
  added value and contribution they
  make to the stakeholders
• Reporting toThe Baltic Assembly
        RECOMMENDATIONS OF THE
           WORKING GROUP-1

1. To mandate joint/ simultaneous audit in the field of
   combating VAT fraud and mutual cooperation in
   taxation matters – now
2. To form a preparation team – during 1 month
3. To mandate the preparation team to set up audit
   objectives, methods, plan and terms – until the next
   Annual Meeting of the Representatives of the Nordic
   and Baltic SAI’s 2005
4. To confirm audit objectives, methods, plan and
   terms – during the next Annual Meeting of the
   Representatives of the Nordic and Baltic SAI’s 2005
          RECOMMENDATIONS OF THE
             WORKING GROUP -2

5. To execute audit – until the Annual Meeting of
  the Representatives of the Nordic and Baltic
  SAI’s 2006
6. To present audit report and audit results to the
  Annual Meeting of the Representatives
   of the Nordic and Baltic SAI’s 2006
7. To present audit report and audit
results to Parliaments of countries
– until the end 2006
THANKS FOR ATTENTION AND
   SUCCESSFUL STARTS

				
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