HI there, I've came across several articles discuss about random audit an Non random to tax evasion or compliance. Most of the articles is relating about effect of audit (random or non random) conducted by tax department in Norway.
1) what is random audit.
2) What is the method of random audit
3) Does taxpayers notified that they has been audited via random selection? Since the article found most of random audit leads to tax evasion by taxpayers. I expect the taxpayers know that they has been selected randomly and wont be selected again in a near corner so that they tend to underreport income and overstate of relief and deductions for anticipating audit wont come again.
Hope anyone here could make it clear for me. TQ in advance
This is audit done without prior notice. It cam be financial, tax,quality or compliance. This helps to prevent bias and remain objective.
Tq for ur reply. My concern also, do the taxpayers know that they has been randomly selected. The articles found that random audit prone to bomb crater effect which mean the audited (random) taxpayers tend to commit tax evasion since they believe they wont be audited in the next corner. Subsequently the finding was differ with non random audit. Apparently non random audit leads to deterrence effect
An auditor may not be able to examine all available records or information to make an opinion on a subject. Random audit is used to select few items (sample) from a group of items (population) in an unpredictable mannner for inclusion to draw inference about the entire records, support his opinion and form as the basis of his report for stakeholders' decision making. However, the principle of equal chance of all items and appropriate audit procedure must be applied to aviod been biased. It is used to prevent prediction by anybody within the system. Tax payer cannot predict it.
A random audits are audit for fair method of allocating resources i.e the regulators are not able to audit all entities of interest but random audits allow every potential person or firm to subject to audit to have a similar probability of being audited.
A random audit is an unplanned inspection of an organization's accounts or activities, selected randomly, to ensure compliance and detect irregularities.
A random audit usually based on audit risk, audit plan and special target audit. Auditor have to plan an object to audit in an certain circumstance. An object of audit taken random if fulfill criterias (example: low tax obligation possibility or any fiscal losses). Many randoms implemented in audit. The first, Auditee that who choiced must be accordance with an audit standard applied.
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