7/3/2023 0 Comments Audit findings![]() ![]() That study suggests the main reason behind the unfair treatment is the way audits are administered through the Earned Income Tax Credit (EITC) - a tax break designed to supplement the income of low-wage workers. The findings from the agency's internal investigation come after researchers from Stanford University, the University of Michigan, the University of Chicago and the Treasury Department in January reported findings from a study that Black Americans are three to five times more likely to have their federal tax returns audited than taxpayers of other races. "The racial discrimination that has plagued American society for centuries routinely shows up in algorithms that governments and private organizations put in place, even when those algorithms are intended to be race-neutral," said Wyden, calling the racial bias "completely unacceptable." Senate Finance Committee Chairman Ron Wyden., D-Ore., echoed in a statement Monday that audit algorithms are the root of the problem of racial bias in audits. Werfel said the agency is "deeply concerned" by the findings from its investigation and is committed to doing the work to understand and address any disparities in its practices. "We are dedicating significant resources to quickly evaluating the extent to which IRS's exam priorities and automated processes, and the data available to the IRS for use in exam selection, contribute to this disparity," Werfel said in the letter. In a letter to the Senate Finance Committee on Monday, Werfel said the agency would review its audit algorithms for specific anti-poverty tax credits to look for and address any racial biases. "While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population," IRS Commissioner Daniel Werfel told lawmakers. The auditeeās reply may well provide additional audit evidence that was not available to or understood by the audit team when it initially formulated the finding.Black taxpayers are audited at higher rates than other racial groups, an internal IRS investigation has confirmed. The findings are communicated to the auditee, whose written response is required, providing confirmation that the facts and findings are accurate or indicating reasons for disagreement. Constructive discussion of initial findings with the auditee helps to establish the quantity and quality of evidence. Active dialogue should be maintained with the auditee and potential audit findings discussed as and when they arise to take into account different arguments and perspectives. Performance audits should focus on providing a balanced view of the topic, presenting not only deficiencies but also, when appropriate, positive findings and indications of good practice or corrective action already taken. However, qualitative effects, as evidenced in a lack of control, poor decisions or a lack of concern for service, will also be significant and need to be considered. expensive inputs or processes, unproductive facilities, time delays. In many cases, the effect of a finding may be quantifiable, e.g. The team needs to identify the cause of the deficiency and assess its potential effect. Discussing the matter with auditee management may be necessary so as to determine whether the problem can be addressed by the auditee or is outside its control. ![]() The team needs to determine auditee management's awareness of the issue if management is aware of the problem and already taking corrective action, this needs to be recorded and taken into consideration for reporting purposes. The assessment must be clearly reflected in the wording of the finding, with qualifying words (e.g. The team must assess the degree of confidence in the audit finding, based upon the strength of the evidence. Determining whether the deficiency is an isolated instance or represents a systematic problem may require gathering additional evidence. Where performance does not meet the criteria, further investigation is needed to gain assurance that any resultant audit findings and conclusions are significant, fair and well-founded. Instructions The audit team uses the information gathered to make an objective assessment of actual performance against the audit criteria. impact/effect in terms of economy, efficiency and effectiveness.analysis of the nature, significance, and cause of the problem or the better-than-expected performance (in the interest of having a balanced view) and.a fact includes also cause, materiality, source and extent of evidence ![]()
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