Establishment and Use of Computer-Assisted Audit Tools and Techniques (CAATTs) Satellite Laboratories

May 12, 2016 OPERATIONS MEMORANDUM NO. 2016-05-03 TO : The Regional Directors Revenue Region Nos. 4-San Fernando, Pampanga, 5- Caloocan City, 6-Manila, 8-Makati City, 9-San Pablo City, 11-Iloilo City, 13-Cebu City and 19-Davao City The Revenue District Officers Revenue District Office Nos. 19-SBMA, 54 A-Trece Martirez City and 80-Mandaue City All Others Concerned THRU : Nelson M. Aspe Deputy Commissioner, Operations Group SUBJECT : Establishment and Use of Computer-Assisted Audit Tools and Techniques (CAATTs) Satellite Laboratories Improving the quality and efficiency of tax audit is one of the continuous challenges for revenue officers in this Bureau. Investing in audit tools, as well as training and capability building of tax auditors, are some of the ways to facilitate the audit process and generate valid results. Hence, a CAATTs Laboratory is created under your respective office with the following objectives: 1. To create a CAATTs Satellite Laboratory in the regional and district offices for efficient and expedient process of completing an audit; 2. To enhance audit capabilities and technical skills of tax auditors under a computerized accounting system environment; 3. To increase revenue collection through proper utilization and analysis of data from internal and external sources; and 4. To provide policies and procedures for the use of the CAATTs laboratory. aDSIHc Important features of the CAATTs Laboratory are presented below: A. Organization of the CAATTs Laboratory All Satellite CAATTs laboratories of the Bureau shall have standard procedures for utilization. Each laboratory shall be housed in a highly secured area where laboratory personnel with authorized access shall be allowed to enter and make use of. A Manager, Assistant Manager, Data Mart Administrator, Technical and Administrative Support shall compose the CAATTs Satellite Laboratory Team. They are responsible for the management and administration of the satellite laboratory. A Revenue Special Order shall be prepared to specifically identify the personnel of the satellite laboratory in each site. B. Functions and Responsibilities of the CAATTs Laboratory Team Manager (Assistant Regional Director) Oversee the operation of the CAATTs Satellite Laboratory Conduct regular meetings with the other team members for compliance with rules and regulations in the use of the laboratory and for the resolution of issues and problems Approve and monitor the compliance report after every completed use of the CAATTs laboratory Recommend approval of revenue regional special orders and access requests related to the use of the laboratory Report to the Assistant Commissioner, Assessment Service accomplishments, issues and problems related to the laboratory Coordinate with the concerned offices for the logistic needs and resolution of issues/problems for the laboratory Ensure the adequacy of the administrative requirements for the laboratory Assistant Manager (RDC Head) Implement the set-up of standardized and prescribed audit software Ensure that the Revenue Officers who will use the facility are properly trained or coached by CAATTs Experts in coordination with the Training Delivery Division Monitor the maintenance of all IT database, as well as hardware within the laboratory, and ensure that they are always available and accessible to authorized Revenue Officers ATICcS Manage the technical and administrative requirements of the CAATTs Satellite Laboratory, specifically the maintenance and support of the IT facilities Supervise the full time Data Mart Administrator Monitor and ensure the maintenance of records within the laboratory Data Mart Administrator Trained in the use of generalized audit software Handle the systems administration requirements of the CAATTs Laboratory Maintain data files of taxpayers covered by a special project, or regular audit activity assigned to a particular investigation office Manage the movement of data files into their respective sub-file folders and group in taxpayer's folder and finally to CAATTs Satellite Laboratory laptop station for data analysis and interrogation Ensure that the uploaded electronic data provided by Revenue Officers are copied in the designated repositories Ensure that the technical requirements of the CAATTs Satellite Laboratory are addressed Coordinate and report any technical issues to the RDC Helpdesk related to the installed software, IT equipment and connectivity Coordinate with the Data Warehouse and Systems Operations Division (DWSOD) for the request to extract data from the Data Warehouse Manage the activities in the laboratory, such as trainings, coaching, etc. and prepare a quarterly summary of the activities Devise a mandatory user log/work log system to record all data analysis/data interrogation conducted at the CAATTs Satellite Laboratory Raise to the Assistant Manager issues and problems regarding the use of the laboratory Technical Support Staff Handle the IT equipment maintenance and network requirements of the CAATTs Satellite Laboratory in coordination with the RDC Help Desk and DWSOD Log IT hardware and network issues encountered in the laboratory Resolve/elevate, if necessary, all technical issues encountered Transmit data interrogated filed to respective email addresses of revenue officers for presentation to the taxpayer after approval by the Data Mart Administrator Coach the CAATTs Satellite Laboratory users (Revenue Officers and Group Supervisors) with regard to securing the processed/interrogated data Upload electronic/specialized books of accounts ( e.g. , general ledger, etc.) to the work stations of the revenue officers concerned for interrogation at the CAATTs Satellite Laboratory after approval by the Data Mart Administrator Elevate to the Data Mart Administrator the technical requirements of the CAATTs Satellite Laboratory Administrative Support Staff Maintain manual records of attendance and other administrative files within the laboratory Maintain record of usage of CAATTs Satellite Laboratory through logbook Manage the schedule of attendance of Revenue Officers who will use the facility Record/maintain audit related issuances Receive and transmit non-electronic documents from and to concerned offices Ensure the cleanliness of the laboratory Submit required reports to the Data Mart Administrator Revenue Officers/Group Supervisors Ensure that the CDs (extracted from the TP as part of the on-site audit) are properly labelled and a request form have been properly filled out Ensure that processed data are "saved" with a password using the encryption facility of Microsoft Excel Regularly updates the password in the Active Directory Account Responsible for securing "hard copy" documents obtained from the taxpayer after it has been scanned in the Satellite CAATTs Laboratory Prepare and submit the Compliance Report C. Policies and Guidelines Functional Aspect 1. The CAATTs Laboratory will be equipped with a Data Mart which shall contain, among others, information electronically submitted by taxpayers, such as: a. Summary List of Sales (SLS) b. Summary List of Purchases (SLP) c. Monthly Alphalist of Payees (MAP) d. Summary Alphalist of Withholding Agents of Income Payments Subject to Tax (SAWT) e. Alphalist of Payees subjected to Final Withholding Tax (Reported under BIR Form 2306) f. BIR Forms 1604 CF and 1604 E including schedules g. Summary List of Importations h. All other electronic files maintained by the taxpayer upon the adoption of a Computerized Accounting System (CAS) 2. Only the lead Revenue Officer (RO) or Group Supervisor (GS) designated on the eLA can request the above information from the CAATTs laboratory. 3. The concerned RO or GS shall use CAATTs Data Request/Action Form (Annex "A") and shall submit the duly accomplished form to the Assistant Manager of the laboratory. The project name (if applicable), name of taxpayer, details of the Letter of Authority issued to the taxpayer, including the names of the revenue officer assigned to the case, should be indicated on the data request/action form. 4. Likewise, the Revenue Officer/Group Supervisor shall request to upload all other electronic, files ( e.g. , e-books of accounts) maintained by the taxpayer upon the adoption of a Computerized Accounting System (CAS) by proper accomplishment of CAATTs Request to Upload Taxpayer Data Form (Annex "A-1"). 5. All Electronic Letters of Authority (eLAs) covering any audit of computerized accounting records or any modules thereof (Payroll Systems, POS, etc.) should undergo data analysis/data interrogation procedure to be performed in the laboratory. cSEDTC 6. Data analysis/data interrogation should be performed within five (5) working days from the determination/submission of complete data files in the laboratory with the help of the Data Mart Administrator. It is understood that the lead Revenue Officer and/or Group Supervisor of the case shall perform the data analysis/data interrogation with the help of the Data Mart Administrator. 7. For systematic data analysis and interrogation, Revenue Audit Memorandum Order No. 1-2008 should be used. 8. Data analysis/data interrogation results shall be submitted/transmitted by the CAATTs Data Mart Administrator within ten (10) working days from commencement of data analysis/data interrogation for consolidation with the audit findings derived by the eLA-designated Revenue Officers from other audit techniques and methods. 9. Result of data analysis/data interrogation obtained and done at the CAATTs laboratory shall always form part of the audit report of the LA-designated Revenue Officers together with the original routed and signed copy of the Data Request/Action Form. A separate result log of every data analysis/data interrogation (processed files) shall be uploaded to the Data Mart Server by the Data Mart Administrator and shall be emailed as well to the requesting Revenue Officer, copy furnished the Group Supervisor. 10. As a security precaution, only one (1) laptop in the CAATTs Laboratory shall be given internet access to download patches while all the laptops shall be networked for KBOX monitoring. Download function or authority from the CAATTs Data Mart shall be available only to the CAATTs Data Mart Administrator and data extracted from the BIR FTP Server shall be "read-only". All data analysis are required to be done only within the CAATTs Laboratory by authorized users. CAATTs Laptops with pre-loaded GENERALIZED AUDIT SOFTWARE and other audit tools are not allowed to be taken out the CAATTs Laboratory. Likewise, personal or other BIR issued laptops/desktop net assigned at the CAATTs Laboratory cannot be brought inside the CAATTs Laboratory. 11. On-site computer audit of taxpayer's CAS shall be performed by the eLA-designated Revenue Officer. However, assistance may be sought from the other Revenue Officers who are CAATTs experts including the Data Mart Administrator, upon written request by eLA-designated Revenue Officers through their respective Regional Directors. Result of on the site-computer audit of taxpayer's CAS shall always form part of the audit report of the eLA-designated Revenue Officer. 12. The Revenue Officer will only be assigned with the same CAATTs Laboratory computer all throughout his stay in the Revenue Region. 13. All outputs, working papers, schedules and other tables generated from the facilities will be encrypted and secured with passwords before turning them over to the Revenue Officer by email facilities. 14. USB ports and SD slots are disabled to secure incoming and outgoing files. The Data Mart Administrator, upon approval of the Assistant Manager, may enable these ports when voluminous files cannot be transmitted by email. 15. Outputs, working papers, tables and schedules generated from the use of the facilities will be summarized in a CAATTs Compliance Form (Annex "B"). The form details the result of the output with a numeric values indicated therein. It will be filled up by the Revenue Officer and signed by the Data Mart Administrator. It will form part of the case docket. 16. Reallocation of the software licenses will be recommended for sites which did not utilize the said facility and the same will be transferred to other sites. 17. The Data Mart Administrator will summarize the activities in the Satellite Laboratory Office in a quarterly report to the Manager (Assistant Regional Director), copy furnished the Assistant Commissioner, Assessment Service, as follows: a. List of Revenue Officers/Group Supervisor users with inclusive dates of usage of the laboratory and the time spent b. Number of eLAs per lead Revenue Officer where CAATTs was utilized with the List of eLAs covered 18. The Group Supervisor shall report to the Revenue District Officer, copy furnished the Regional Director and Assistant Commissioner-Assessment Service, a list of eLAs where CAATTs was used and where audit was completed with the turnaround time to complete the audit, i.e ., counting from the date of eLA issuance to the date of submission of report. All Revenue Officers conducting audit/investigation of taxpayers using Computerized Accounting Systems or modules thereof are required to accomplish and comply with all the reporting requirements under existing Revenue Audit Memorandum Orders. AIDSTE Technical Aspect 1. IT related issues and concern reported/logged in the Issue Management Software to the RDC Helpdesk shall be addressed by the respective RDC technical support. 2. The Data Mart Administrator shall be notified in advance in case there will be maintenance works of IT Equipment. 3. All Requests for Data from the Data Warehouse shall be in writing addressed to the Manager (Assistant Regional Director), who shall transmit the request to the Chief, DWSOD. 4. The DWSOD shall: check the availability of the approved Data Mart Request in the Data Warehouse Server; extract the available data per request; and upload/copy the data to the CAATTs Satellite ftp Server. 5. Request for Access to the Integrated Tax System (ITS) and other eServices shall follow the existing process. Only completely and correctly filled out and signed BIR Form 044-Access Request shall be processed. 6. All Access Request must be received by the RDC within 10 o'clock a.m. so the account (username and password) will be provided the next day. 7. The Security Management Division (SMD) shall receive and process BIR Form 044-Access Request. 8. Granted Access Request shall be emailed to the Revenue District Officer (RDO) with the assigned Username and Password. For your information and strict compliance. (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue