The general process of knowing the phenomenon, processes and activities, no matter in what field of activity they take place, can be made by organizing and applying of some procedural systems, with the purpose to establish the correct way of their achievement in practice. For achieving the knowledge process of an economical phenomenon, process or activity, the tax inspection has to apply its own procedures and methods, that will have to obtain accurate results, according to reality and to tax legislation.tax inspection, procedures and methods

ciumag, marin

English

Research Papers in Economics

Methods and Procedures for the Accomplishment of Tax Inspection
CIUMAG MARIN, conf. univ. dr. “Constantin Brâncuşi” University of 
Tg-Jiu
Abstract: 
The general process of knowing the phenomenon, processes and activities, no 
matter in what field of activity they take place, can be made by organizing and applying 
of some procedural systems, with the purpose to establish the correct way of their 
achievement in practice. 
For achieving the knowledge process of an economical phenomenon, process or 
activity, the tax inspection has to apply its own procedures and methods, that will have to 
obtain accurate results, according to reality and to tax legislation.
The tax inspection has as an object checking the taxation basis, the 
legality and the concordance of the tax declarations, the correctness and the 
accuracy of the accomplishment of the obligations by the tax payers, the 
respect   of   the   tax   and   book-keeping   legislation’s   stipulations,   the 
establishment   of   the   payment   obligations’   differences   and   also   the 
accessories afferent to these.
The   knowledge   process   of   the   manifestation   module   of   the 
phenomenon, processes and activities is accomplished by proceedings and 
techniques specific to each discipline. 
Like any other discipline that has in purpose to research the concrete 
and practical module to accomplish certain human acts, the tax audit may 
use many analysis proceedings and techniques, both general, belonging to 
other disciplines, and specific to the method, the sphere and its activity 
object. From this multitude, we consider that the ones regarding both the 
documentary and the factual control are specific to the exertion mission of 
the tax audit.
A. The book-keeping documentary control
The documentary control, as a proceeding specific to the tax audit, is 
defined as a complex of checking acts accomplished in order to establish the 
legality and the reality of certain data or of certain economical operations 
registered in the primary documents and/or in the technical-operative, 
financial and administrative evidences and also of their accomplishment’s 
efficiency.
The book-keeping documentary control is accomplished by specific 
techniques, each of them having its own exertion procedure, but with a common purpose, namely the establishment of the reality regarding the 
status of an economical phenomenon resulted from its comparison to a series 
of criteria through which it was defined and institutionalized.
Between the techniques of the book-keeping documentary control, we 
mention   the   chronological   control,   the   systematic   control,   the   mutual 
control, the crossed control, the control calculation and investigation.
The chronological control consists in the analysis of all the documents 
that make the order of their emission and registration in the evidences, 
without groups or preliminary systematizations on different criteria or 
activities of theirs. 
The systematic control represents another technique belonging to the 
proceeding book-keeping documentary control, used with very good results 
when the control action contain many theme objectives referring to different 
activities, but in the frame of the same unity. This control technique 
supposes   at   first   to   group   the   documents   on   different   activities,   the 
accomplishment of the chronological or conversely chronological control of 
all the documents that make the object of the checking theme in frame of 
each group.
The mutual control is the documentary control technique whose 
objective consists in establishing if some of the common information that 
have the same content, registered in primary documents, different as form 
and function but with a part of the contained information, are identical.
The crossed control is exerted both at the unity that emits the 
document, by checking the data registered in the kept copy, and at the 
different partners of it or at different economical unities that have received 
the other copies, mentioning that the emitter’s copy is not always the correct 
one.
The investigation is featured by the fact that it is different from the 
techniques presented above, both by the activity sphere and by the manner of 
exerting the checking action that is accomplished in its frame.
The investigation is a control way that is accomplished when the tax 
auditor does not find, in the checked documents and evidences, all the 
elements needed to support certain findings, but he does not find either 
enough elements that could confirm the correct accomplishment of the 
controlled operations. 
So, the investigation is an action specific to the auditor and its success 
depends, in a determined manner, on his professional preparation and on the 
ability used for the accomplishment of the checking.
The calculation control represents one of the documentary control’s 
techniques that are used the most in the financial-book-keeping checking activity and it supposes the remaking, by the auditor, basing on the data 
registered in the official, primary or centralizing documents and on the 
legally established procedures, all of the calculations from which results an 
information that makes the object of the control. By applying this control 
technique, it is accomplished a double checking, both of the information 
registered in the primary documents and of the aggregated ones, obtained 
from these ones, fact that gives the auditor a great confidence.
B. The factual control
The factual control is the proceeding that, by using certain techniques 
specific to the tax audit, accomplishes its main objective that consists in the 
establishment of the existence and of the movement during a certain period 
of time that is determined, of all the material and money means in an 
economical unity. The proceeding also wants to establish the physical status 
of the material means, their administration way and the way we respect the 
legal stipulations regarding their utilization in the economical process.
The factual control is accomplished by using several techniques and 
we will present these ones: the inventorying, the technical expertise and the 
laboratory analysis, the physical inspection and the direct observation.
 The inventorying, as a technique of the factual control’s proceeding, 
is defined as an ensemble of operations that has in purpose to find the 
existence, in the economical unity’s patrimony, of all the active and passive 
elements in a certain moment of time.
The expertise is “a means of proof, regulated by the civil procedure 
code’s stipulations, demanded by the court, in order to establish an objective 
truth needed for clarifying another factual status that demand  special 
preparation in the field of science, technique, art or other specialty that the 
judge does not own”.
The technical expertise, as a method of accomplishing the factual 
control, is the activity of establishing the reality regarding the integrity of 
certain material values or of the way to accomplish certain technical 
operations that are integrated in an economical process that suffers the 
checking action. 
The technical expertise is accomplished by authorized persons, for the 
situations when the inspectors’ professional preparation does not allow them 
to establish certain truths related to the technical aspects that make the object 
of the checking activity. In order to ground the found deviations, the auditors 
may demand even the accomplishment of more complicated physical, 
chemical, electrostatic or other kind of analysis, whose accomplishment 
demand the utilization of the laboratory devices or the specialty ones.The results of the technical expertise and of the laboratory analysis 
represent proves in supporting the findings only if they are confirmed by the 
data registered in the primary documents, the technical-operative or financial 
or administrative evidences of the checked economical unity.
The direct observation is an exertion technique of the factual control 
proceeding that supposes the auditor’s change of place, referring especially 
to the way the economical-financial operations were realized. 
The physical inspection is another technique belonging to the factual 
control proceeding, through which the auditor, after the accomplishment of 
the checking action, establishes himself the status of the patrimonial element 
at a certain moment of time. The finding of the eventual deviations related to 
the active’s status will be done by confronting the physical inspection’s 
result to data regarding its situation at the control moment, registered in the 
book-keeping evidence of the controlled unity.
The physical inspection is a control way whose results may represent 
very exact proves because of these results come from two controls: the 
physical one, accomplished at a certain moment of time, and the one 
consisting in the checking accomplished subsequently by the same person.
The evaluation methods have evaluated across the time in parallel 
with the tax products’ evolution. These have to be compatible with the 
principles that are placed at the base of the taxable matter’s determination, 
with the taxation techniques and with the economical agents’ obligations 
regarding the organization and the management of the book-keeping.
The evaluation by means of the tax declarations made by third persons 
that know the exact situations of the tax payers sometimes completes the 
used methods or may function independently of it.
The obligation of the documents’ evaluation and presentation, from 
which results the quantum of the payments that were done, belongs to 
certain third persons, without existing the compulsoriness of accomplishing 
some periodical tax declaration to be laid down at the tax administration. So, 
the taxable incomes’ declaration is made when it is expressly demanded or 
when the tax administration exerts the control act.
The method contributes to the simplification of the relations between 
the tax administration and the tax payers, when the periodical control of the 
information coming from the taxable incomes gets other valences. The 
administration’s duty is just to check the economical agents, the public 
institutions and the persons that make payment to other subjects in the 
economy and, in consequence, know the exact situation of the paid incomes. 
These may be: public societies and institutions for the employees’ wages, for 
the fees and commissions paid to certain persons, for the indirect taxes contained in the prices of the goods and services offered on the market (that 
do   not   make   the   object   of   the   tax   declarations   laid   down   at   the 
administration), the financial societies that have to pay the incomes brought 
by the financial products of their owners, the lodgers for the rents paid to the 
owners, the debtors for the debts paid to the creditors, the social security 
organs for the fees paid to the doctors, the brokers and the dealers for the 
transacted financial titles etc.
The contractual evaluation is accomplished depending on a number of 
pre-established economical elements, specific to the activities developed by 
the tax payers that are in a direct relation with the taxable matter represented 
by the income or by the fortune and that are considered to influence their 
contribution ability.
The major disadvantage of the method consists in the fact that, no 
matter the number of the revealing elements that were used, we arrive to a 
general under-evaluation of the taxable matter. This trend is stimulated by 
the existence of two influences, one of them from the legislative frame and 
the other one from the tax payers.
The evaluation based on the external signs or by assumption is an 
extremely simple method but it is imperfect for corresponding to the modern 
demands of tax justice, this one still subsists in the tax practice in order to 
establish   some   local   taxes.   The   disadvantages   that   determined   its 
abandonment come from the rudimentary evaluation technique that leads to 
the establishment of an approximated taxable value and to the impossibility 
of the establishment of a correlation between this and the tax payer’s 
contribution ability.
The method represents a limited appliance of the reality principle 
since the used indexes are not enough relevant in order to determine the real 
value of the taxable matter.
The taxable mater is taken into consideration in its ensemble but, since 
the taxable value is established by means of some indexes, considered as 
representing external signs of its value, in my opinion, the tax drawing 
reflects neither the real fluctuation of the taxable matter’s value, nor the real 
contribution ability, but just a supposed one. The impossibility to provide 
the correlation of the contribution ability with the tax obligations and the 
neglecting of the incomes and fortune that do not correspond to the well 
established external signs make the method to be unfair in its ensemble. In 
the same time, it is unproductive for the budget because of the extremely 
low and relatively stable efficiency.
The   corrective   evaluation   contains   an   ensemble   of   procedures, 
through which it is reestablished currently or it is determined in exceptional situations the taxable value and the legal quantum of the tax drawings. The 
tax administration’s right to establish the correct value of the taxable matter 
is not limited at the procedure currently named administrative evaluation 
(after all, the contractual evaluation is also an evaluation made by the tax 
administration), either ex oficio evaluation, or evaluation by assumption in a 
penalizing purpose. All these names respond to an ensemble of questions. 
Who unleashes the evaluation procedure? The tax administration does! How 
is it developed? Ex oficio, basing on the right to control and correct the 
quantum of the tax payer’s tax obligation! Why? To correct the established 
obligation or to sanction the defalcations from the payment of the legal 
obligations! Therefore, it appears a limitation that cannot be accepted of the 
situations when the tax administration interferes in order to provide the 
respect of the tax laws and the protection of the claims that the State has 
over the tax payers.
In order to accomplish the tax inspection, the specialty organs may 
apply two control methods:
- The control by poll that consists in checking selectively the important 
documents and operations where it is reflected the calculation way, 
the evidence way and the payment way of the tax obligations due to 
the strengthened general budget.
- The electronic control that consists in the checking activity of the 
book-keeping and of its sources, electronically processed, using the 
analysis, evaluation and testing methods assisted by the specialty 
informatics tools.
The tax inspection’s purpose is to diminish the tax evasion and, as 
much as possible, to eliminate it. For that, the methods and the techniques 
used by the control teams have to evolve permanently and to correspond to 
the European Union’s demand, as Romania is a member since January 1
st, 
2007.
References:
1. Bouquin H. – Compatibilite de Gestion, Edition Economica, Paris, 
2003 
2. Calin O., Carstea Gh. – The Administration Book-keeping and the 
Costs Calculation, Altos Press, Bucharest, 2003
3. Ciumag M. – The Public Institutions’ Book-keeping, 2
nd  edition – 
reviewed and added, Mirton Press, Timişoara, 2004
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companies, Ager Press, Tg-Jiu, 20025. Ciumag  M. – The Financial Book-keeping according to the 4
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Direction of CEE, Universitaria Press, Craiova, 2006
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apply the Law no. 571/2003 regarding the Fiscal code , MO no. 
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and Book-keeping; The book-keeping, the Expertise and the Business 
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44/2004 for the approval of the Methodological Norms to apply the Law no. 571/2003 regarding the Fiscal code ,

571/2003 regarding the Fiscal code , with the subsequent changes and completions

Carstea Gh. – The Administration Book-keeping and the Costs Calculation,

Modern Services – A Challenge for the Economical Theory and Practice,

Romanian Financial Book-keeping,

The book-keeping law no. 82/1991, republished, MO 454/2008, with the subsequent changes and completions

The collections of the special magazines 2003-2006; Public Finances and Book-keeping; The book-keeping, the Expertise and the Business Audit; The Economist; The Economical Tribune; The Economical Truth.

The Financial Book-keeping for small and medium companies, Ager Press, Tg-Jiu, 20025. Ciumag M. – The Financial Book-keeping according to the 4 th Direction of CEE,

The Public Institutions’ Book-keeping, 2 nd edition – reviewed and added,

Metode si proceduri pentru efectuarea inspectiei fiscale

Metode si proceduri pentru efectuarea inspectiei fiscale

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Research Papers in Economics