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21 May 09 ATO's management of serious non-compliance - audit report

On 20 May 2009 the Australian National Audit Office (ANAO) tabled a report entitled "The Australian Taxation Office's Management of Serious Non-Compliance" (Audit Report No 34 2008-09). The audit assessed the effectiveness of the ATO's management of the risks of fraud and serious evasion. The focus of the audit was on the ATO's Serious Non-Compliance business line (SNC). The audit also assessed whether the ATO has developed a comprehensive and integrated whole of agency approach to managing identified risks relating to fraud and serious evasion. The following activities were excluded from the scope of the audit: Project Wickenby; in-house prosecutions; and internal fraud.

The Tax Office defines serious non-compliance as those forms of behaviour which:
  • involve disengagement, extremes of evasion, abuse of revenue systems, strong resistance to taxation obligations, or serious criminal conduct, and
  • have the potential, left unchecked, to significantly undermine public confidence in the administration of the taxation laws.
The ANAO concluded that the ATO has developed a variety of strategies to address the risks of serious non-compliance. These strategies, and the processes underpinning them, have assisted in delivering many prosecutions and successful audit outcomes for 2007-2008 as outlined in the report. Notwithstanding these successes, there is considerable scope for the ATO to improve the effectiveness of the arrangements to deter, detect and deal with fraud and serious evasion. To better manage the risks of SNC, it is important that the ATO: increases deterrent activities based on sound research and analysis; centrally records all fraud referrals to support intelligence led case selection; clearly links case selection to national strategic priorities; and increases management oversight of cases. The ANAO recognises that the ATO has taken significant steps in the last 12 months to improve the administrative effectiveness of processes and practices of SNC activities.

For a copy of the audit report go here.

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