Officers employed to audit companies by the Hong Kong tax authority have been criticised for failing to spot profit understatement in many of the cases which they investigate.
Reporting on Wednesday, the Hong Kong Standard revealed that in a sample of 21 field audit cases, assessing officers located understatement of profits in just 3 cases. However, subsequent investigation by Inland Revenue Department (IRD) officers uncovered irregularities in all 21 cases.
'The subsequent detection of substantial understatements of profits in these cases suggests that the prior screening work performed on these cases was inadequate,' the Director of Audit announced on Wednesday.
The SAR's Inland Revenue Department is reported to be deeply disturbed by the potential revenue loss which occurs each year through understatement of profits, as only a few organisations are selected for field audits, and it now appears that a substantial proportion of those investigated have been allowed to slip through the net.
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