Organization and Functions of the Inspection Service Including the Divisions Under It Down to Section Level

August 31, 2000 REVENUE ADMINISTRATIVE ORDER NO. 12-00 SUBJECT : Organization and Functions of the Inspection Service Including the Divisions Under It Down to Section Level TO : All Internal Revenue Officers and Others Concerned I. OBJECTIVE: This Order defines the organization and functions of the Inspection Service including its divisions and sections pursuant to Executive Order No. 175 dated November 3, 1999 on Organizational Restructuring of the Bureau of Internal Revenue to Improve Administrative Control Over Certain Categories of Taxpayers. II. ORGANIZATION: The Inspection Service shall be under the direct supervision of the Deputy Commissioner for Legal and Inspection Group. It shall be headed by an Assistant Commissioner and shall be composed of the following divisions with their respective sections: A. Internal Security Division 1. Anti-Graft and Investigation Section 2. Security and Inspection Section B. Internal Audit Division 1. Fiscal Audit Section 2. Performance Audit Section 3. Computer Audit Section C. Personnel Inquiry Division 1. Hearing Panel I 2. Hearing Panel II 3. Hearing Panel III III. FUNCTIONS: INSPECTION SERVICE shall: 1. Perform staff, advisory and consultative functions relative to internal control system, internal audit, preliminary/fact finding investigation and prosecution as well as formal investigation/hearing of administrative cases filed against revenue personnel and the security program of the Bureau; 2. Develop and administer policies, work programs, standards, guidelines and procedures relative to the abovementioned functions; 3. Provide policy guidance and operational directions to all divisions under the Service relative to the abovementioned functions; 4. Conduct audit of personnel performance, internal systems and computer systems; 5. Conduct spot-check of cash and property accountabilities of all accountable officers; 6. Implement the physical security program to safeguard personnel, records, equipment, installation and other properties of the Bureau; 7. Conduct preliminary/fact finding investigation and prosecution of administrative cases filed against revenue personnel; 8. Conduct formal investigation/hearing of administrative charges formally filed against erring revenue personnel; 9. Prepare and recommend appropriate actions/decisions on administrative cases heard; 10. Coordinate with proper offices in the implementation of the abovementioned functions; 11. Monitor, evaluate and improve programs and activities under the responsibility of the Service; 12. Review, recommend and/or approve all reports and other actions of the divisions under the Service; 13. Consolidate and/or prepare prescribed reports for submission to the offices concerned; and 14. Perform such other related functions as may be assigned. A. Internal Security Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to the preliminary/fact finding investigation and prosecution of administrative cases filed against revenue personnel and the physical security program of the Bureau; 2. Conduct preliminary/fact finding investigation and prosecution of cases filed against revenue personnel involving violation of the Anti-Graft and Corrupt Practices Act (Republic Act 3019); the Administrative Code of 1987 (Executive Order 292) and the Omnibus Rules Implementing Book V of said Code; the Code of Conduct and Ethical Standards of Public Officials and Employees (Republic Act 6713); the Law on Sexual Harassment (RA 7877); illegal enrichment cases and other allied laws, administrative issuances, regulations and directives; 3. Act as prosecutor in the formal investigation (hearing) of administrative cases conducted by the Personnel Inquiry Division; 4. Conduct spot-checking of revenue personnel to ascertain compliance with Civil Service Laws and updated Code of Conduct for Revenue Officers and Employees; 5. Investigate all changes/revisions in personal data of BIR employees as referred by Personnel Division in case there is fraud or falsification; 6. Implement physical security policies and measures to safeguard the personnel, records, materials, equipment installations and other properties of the Bureau; 7. Process written request for clearance and issue certification that the concerned revenue personnel has no pending administrative charge; 8. Maintain systematic records of all administrative cases handled by the Division and court decisions and doctrines on administrative cases; 9. Coordinate with the proper offices in the implementation of the abovementioned functions; 10. Prepare prescribed reports for submission to the offices concerned; 11. Prepare revenue issuances relative to the abovementioned functions; and 12. Perform such other related functions as may be assigned. 1. Anti-Graft and Investigation Section shall: 1.1. Evaluate the merits of all denunciations/complaints and reports against revenue officials and employees involving violations of Administrative Code of 1987 (EO 292) and the Omnibus Rules Implementing Book V of said Code and related Civil Service Laws; the Code of Conduct and Ethical Standards of Public Officials and Employees (RA 6713); the Law on Sexual Harassment (RA 7877); Anti-Graft and Corrupt Practices Act (RA 3019); illegal enrichment cases and other allied laws, administrative issuances, regulations and directives and conduct the necessary investigation thereon; 1.2. Collate and evaluate evidence gathered during the investigation, and if prima facie case exists, prepare the appropriate Formal Charge/s and Preventive Suspension Order/s, if warranted, against revenue personnel concerned for the consideration and approval of the Commissioner of Internal Revenue; 1.3. Investigate all changes/revisions in personal data of BIR employees such as status, age, educational qualification, Board/Bar/Civil Service Eligibility and other pertinent data as referred by Personnel Division in case there is fraud or falsification; 1.4. Refer dockets of administrative cases filed against revenue personnel to the Personnel Inquiry Division for the formal investigation/hearing and act as prosecutor in the proceedings; 1.5. Conduct spot-checking of revenue personnel to ascertain compliance with Civil Service Laws and updated Code of Conduct for Revenue Officers and Employees; 1.6. Process written request for clearance and issue certification that the concerned revenue personnel has no pending administrative charge; 1.7. Conduct periodic integrity reviews to determine that the Bureau's personnel are not personally benefiting from their contacts with taxpayers and their representatives and/or with suppliers or others with whom the Bureau has some transactions; and 1.8. Perform such other related functions as may be assigned. 2. Security and Inspection Section shall: 2.1. Implement work programs in relation to the physical security of the Bureau; 2.2. Provide physical security measures for the safeguarding of the personnel, records, supplies and materials, equipment, and installations of the Bureau most especially computers and other communication facilities; 2.3. Supervise the private security agents assigned in the Bureau in accordance with the contract entered into between the BIR and the private security agency; 2.5. Verify reports submitted by the private security agency; 2.6. Conduct security inspections within the premises of the Bureau; 2.7. Coordinate with other government agencies on security matters; and 2.8. Perform such other related functions as may be assigned. B. Internal Audit Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to internal control system and the conduct of fiscal audit, performance audit and computer system audit; 2. Develop and administer an Annual Fiscal Audit Plan for the audit of the fiscal activities of the Bureau; Annual Performance Audit Plan for the conduct of audit on internal controls, policies, projects, systems, procedures, activities and actions of the different Bureau offices to determine their compliance with existing laws, rules/regulations, policies, systems, procedures and other performance measurement standards in order to pinpoint weaknesses in internal controls, to establish employees' responsibilities and accountabilities, and to check on the effectiveness of programs, projects, policies, systems and procedures; and Annual Computer System Audit to determine adequacy of general controls and procedures governing organization of staff, operational functions, access to files, and software terminal activity and general environmental protection; 3. Ascertain the extent of compliance of the different offices of the Bureau with government policies, plans and procedures, laws and regulations which have impact on operations; 4. Review and appraise the internal controls of existing systems and procedures to determine their adequacy; 5. Conduct case reviews to determine that actions are in accordance with applicable and existing laws, rules, procedures, policies, systems and programs, and that results are adequately documented; 6. Review procurement of services, supplies, equipment and other properties to determine conformity with the approved specifications and standards, as well as compliance with the prescribed procurement rules and procedures; 7. Spot-check cash and property accountabilities of all collection/administrative/accountable officers; 8. Review the procedures in the processing of disbursement vouchers to ensure that proper controls over disbursements were followed and payments were made on time; HTSaEC 9. Review the procedures in the issuance of accountable and other BIR forms, supplies, equipment, furniture and fixtures to determine timeliness and adequacy and to establish employees' accountabilities and responsibilities; 10. Conduct performance audit of the different services/offices in the National Office, Regional and Revenue District Offices and Revenue Data Centers relative to their supervision, monitoring and control; 11. Review and appraise the organizational and operational set-up and controls of the Integrated Tax System (ITS) and other application systems in rolled-out offices to determine adequacy of general controls and procedures governing organization of staff, operational functions, access to files, software, hardware and general environmental protection and security; 12. Conduct special fiscal, performance and computer audits based on reports and denunciations submitted by other BIR Offices, taxpayers and the public in general; 13. Determine and analyze problems discovered during audit and prepare reports and recommendations and forward the same to the office/s concerned; 14. Prepare reports to top management on the fiscal, performance and computer audit findings; 15. Propose revisions to existing Bureau policies, programs, systems, guidelines and procedures, laws, rules and regulations based on the audit findings; 16. Coordinate with the proper offices in the implementation of the abovementioned functions; 17. Prepare prescribed reports for submission to the offices concerned; 18. Prepare revenue issuances relative to the abovementioned functions; and 19. Perform such other related functions as may be assigned. 1. Fiscal Audit Section shall: 1.1. Conduct internal audit of all fiscal operations of the Bureau and review accounting records and their supporting documents to determine that they properly and accurately reflect the Bureau's transactions; 1.2. Spot-check cash and non-cash accountabilities such as documentary stamps, Revenue Official Receipts (RORs), etc. of all collection/accountable officers; 1.3. Review procurement of services, supplies, books, furniture and fixtures, equipment and other properties to determine acceptability and conformity with the approved specifications and standards, as well as compliance with the prescribed procurement rules and procedures; 1.4. Conduct unannounced inventory taking of accountable and other BIR forms, supplies, books, furniture and equipment, and reconciliation of items on hand vis-a-vis accounting/office records/inventory to determine that there are no unexplained shortages; 1.5. Conduct inventory of delinquent account dockets to determine prescribed cases and missing dockets; 1.6. Audit the management of tax cases covered with Warrants of Distraint and Levy (WDL) and Warrants of Garnishment (WG) and the timeliness of the issuance, service and execution thereof; 1.7. Verify on a random/selective basis the authenticity of Revenue Official Receipts (RORs) issued to taxpayers by collection/accountable officers and machine validation of authorized agent banks, to ascertain whether the amount indicated therein was actually remitted; 1.8. Conduct sample review of vouchers to ensure that proper controls over disbursements were followed and payments were made on time; 1.9. Review and analyze audit reports submitted by audit teams; 1.10. Prepare reports to top management on the internal audit findings and propose revisions to existing policies, guidelines and procedures, rules and regulations based on these findings for their review and appropriate corrective actions; and 1.11. Perform such other related functions as may be assigned. 2. Performance Audit Section shall: 2.1. Conduct internal audit on the performance of the different services/offices, Regional and District Offices; 2.2. Conduct random or selective post audit evaluation of investigation reports including those not covered by Letters of Authority such as capital gains, tax credit/refund, grant of exemptions and subsidies, cancellation/reduction of assessment, abatement and compromise settlement of delinquent accounts, etc.; 2.3. Spot-check/audit non-cash accountabilities such as Letter of Authority/Audit Notice, Certificate Authorizing Registration/Tax Clearance Certificate, Authority to Change Assessment (ATCA), Tax Credit Certificate (TCC), Tax Debit Memo (TDM), etc. of administrative/accountable officers; 2.4. Conduct spot audit of personnel assigned on premises in exciseable establishments and establishments where raw materials are kept or produced, as well as of personnel assigned to supervise the release of imported goods subject to excise tax, from Custom's custody to place of production, with respect to the performance of their regulatory duties and responsibilities and the related books/records required to be maintained and kept by them in connection therewith; 2.5. Conduct post audit review of the Special Permits and other permits given/granted to excise tax establishments, such as withdrawal certificates and the like; issued Authority to Release Imported Goods (ATRIGs), Registrations of VAT and Non-VAT taxpayers, approved Applications for VAT Zero-rating of Effectively Zero-rated Transactions, and issued Certificates of Exemptions; 2.6. Review the development and conduct of internal training courses to determine whether state-of-the-art technology is being used, whether similar training could have been obtained cheaper commercially, whether course feedback is sought and whether changes are made based on students' evaluation; 2.7. Solicit from taxpayers feedback on the quality of service rendered through exit interviews or subsequent confirmation to validate the information received from internal reviews; 2.8. Prepare reports to top management on the results of performance audit of the different functions, programs and projects of the National, Regional and District Offices and Revenue Data Centers and recommend revisions to existing policies, guidelines and procedures, rules and regulations necessary for instituting corrective actions; 2.9. Coordinate with the different services/offices concerned in the review and evaluation of the conducted performance audit results, monitor the implementation of the necessary corrective actions and appraise their effectiveness; and 2.10. Perform such other related functions as may be assigned. 3. Computer Audit Section shall: 3.1. Conduct internal audit of the computer operation to determine adequacy of general controls and procedures governing organization of staff, operational functions, access to files, and software terminal activity and general environmental protection; 3.2. Review and appraise the application systems which are under development or being run; 3.3. Conduct audit of live data and results, when the system is in use; 3.4. Conduct efficiency and effectiveness audit of the Integrated Tax System/Internal Administration System (IAS); 3.5. Prepare reports to top management on the results of computer system audit and recommend revision to existing policies, standards, guidelines and procedures, rules and regulations necessary for instituting corrective actions; 3.6. Recommend changes/enhancements to improve compliance to existing standards based on the results of computer system audit; and 3.7. Perform such other related functions as may be assigned. C. Personnel Inquiry Division shall: 1. Formulate policies, work programs, standards, guidelines and procedures relative to the formal investigation/hearing of administrative cases of Bureau personnel; 2. Conduct hearing of administrative charges formally filed by the Internal Security Division, regional offices, and upon a sworn written complaint by any other person involving illegal enrichment cases against revenue personnel, violations of Anti-Graft and Corrupt Practices Act, offenses punishable under the Administrative Code of 1987 (EO 292), Civil Service laws and regulations and existing revenue laws, rules, regulations, memoranda and circulars; 3. Cause the service of the approved formal charges and preventive suspension order/s to the respondent/s; 4. Evaluate testimonies of witnesses, as well as evidences presented and submitted by the prosecutor and respondent/s parties during formal investigation/hearing; 5. Conduct studies and researches on questions of law presented during formal hearing of cases and on the recent jurisprudence and principles on administrative law; 6. Prepare and recommend appropriate actions/decisions on administrative cases heard; 7. Maintain a systematic compilation of court and administrative decisions and doctrines for reference; 8. Coordinate with the proper offices in the implementation of the abovementioned functions; 9. Prepare prescribed reports for submission to the offices concerned; 10. Prepare revenue issuances relative to the abovementioned functions; and 11. Perform such other related functions as may be assigned. The Sections ( Hearing Panels I, II and III ) of the Personnel Inquiry Division shall perform identical functions as enumerated above. IV. REPEALING CLAUSE: All issuances or portions thereof not consistent with the provisions of this Order are hereby repealed or amended accordingly. V. EFFECTIVITY: This Order shall take effect immediately. IADaSE (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue Approved: (SGD.) JOSE T. PARDO Secretary of Finance ATTACHMENT BIR Organizational Structure