The role of financial reporting analysis in the planning process of tax audit

Tax income is the source of formation of the biggest part of budget income of the country. Thus, it is significant to manage an entire process of tax administration in a way to effectively mobilize the tax revenues. One of the instruments promoting mobilization of the tax income is tax audit, which, along with others, aims to reveal the cases of avoiding the tax liabilities by the taxpayers and to implement the relevant measures.
An effective management of tax audit process has a particular significance, since the tax auditing authorities are financed from the budget income that is being mobilized by auditing. Effective management of the tax audit process is not available without a relevant planning. Consequently, at the mentioned stage, it is essential to perform procedures that identify risk areas, in order to draw auditors’ attention to these fields.
Taking into account the mentioned, the aim of the present thesis is to reveal promoting ways for increasing effectiveness of the whole process of audit, associated with the planning stage of tax audit.
The thesis presents an analysis of necessity of tax audit effectiveness, the situation in the country regarding the tax audit is evaluated and the ways for increasing process effectiveness are proposed, which are linked to establishment of risk identification procedures based on the analysis of financial reporting in the tax audit planning process.