BIR taps computer technology to check on tax returns

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is requiring computer-aided tools to help check on tax returns. Under memorandum order 1-2008, BIR Commissioner Lilian B. Hefti required revenue officers to use the new accounting system called Computer Assisted Audit Tools and Techniques (CAATTs) for the audit of all taxpayers. She said this is in line with the wide use of information technology (IT) on doing business, including the recording of transactions. Ms. Hefti said IT has created a challenge for tax auditors to maintain their competence. "The change in business process results also in the removal of traditional source of information in which conventional manual audit techniques become inadequate and therefore demands the creation of new audit procedures to conduct the tax compliance audit," she said. In a statement, the BIR said CAATTs can check overstatement of expenses and verify accuracy of value-added tax (VAT), classify and summarize discounts and compare with VAT claims, compare customers with withholding code versus tax credit claims in the income tax return, compare sales invoice price against price list, and extract purchases from suppliers who have no taxpayer identification number. - BusinessWorld