1999 Audit Program on Large Taxpayers and Policy Cases

August 13, 1999 REVENUE MEMORANDUM ORDER NO. 64-99 SUBJECT : 1999 Audit Program on Large Taxpayers and Policy Cases TO : All Internal Revenue Officers Concerned 1. OBJECTIVES 1.1 To develop and prescribe audit policies, guidelines and standards necessary to improve the quality of audits; 1.2 To ensure proper application of laws through the adoption of fair and uniform rules and procedures in the tax treatment of certain industries; 1.3 To improve monitoring of top corporate taxpayers and special industries. LLjur 2. AUDIT POLICIES AND PROCEDURES: 2.1 In General 2.1.1 Coverage . This Audit Program shall cover taxable year 1998 on Income, Value-Added Tax, Percentage, Withholding and other tax returns and liabilities of the following taxpayers/industries: For Regular Audit of Large Taxpayers a. Top 500 Large Taxpayers; and b. Banks, Insurance and Stock Brokers classified as 'Specially Monitored Industries' For Policy Cases a. Chemical and Chemical Products; b. Food and Beverage; and c. Follow-up Audit on selected conglomerates All cases falling under this Section shall be automatically excluded from the coverage of the 1999 Audit Program by the Assessment Service for Revenue District Offices (RDOs). For this purpose, all RDOs or Revenue Data Center (RDC) Heads are directed to forward within 20 days upon approval of this RMO or within 10 days after the filing of the return (if a tax return has not yet been filed) to the Office of the Assistant Commissioner for Enforcement all tax returns of taxpayers covered under this Audit Program. 2.1.2 Exception . Taxpayers covered by this RMO who availed of the ERAP Program under Revenue Regulations 2-99 and Revenue Memorandum Order No. 10-99 shall not be audited except with respect to the tax liabilities not covered by the ERAP Return such as withholding taxes and documentary stamp taxes. 2.1.3 Fiscal Year Return . Taxable year 1998 shall include all those corporations with fiscal years ending on or before June 30, 1999. 2.1.4 Letter of Authority . One Letter of Authority/Audit Notice shall be issued by the Commissioner for each taxpayer subject to audit. 2.2 Reporting of Cases 2.2.1 Audit Reports . Audit reports shall follow the audit guidelines prescribed under existing Audit Manuals, in addition to other reporting requirements for each specialized industry; 2.2.2 Reporting of Cases . Audit reports shall comply with the procedural requirements prescribed under Revenue Memorandum Order No. 62-99. 2.2.3 Industry Audit . Audits undertaken to develop industry procedures, guidelines and standards must be treated/audited as an industry rather than as individual taxpayers. Hence, a joint and coordinated audit must be undertaken in order to ensure uniformity of action. 2.2.4 Revenue Audit Memorandum Order (RAMO) . For every industry covered by policy audits, there shall be a Revenue Audit Memorandum Order (RAMO) to be issued upon completion of each project. This shall serve as a guide in subsequent audits by the assessment units in the District Offices. 3. EFFECTIVITY This Order takes immediately. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue