FACTORS AFFECTING TAX AUDIT EFFECTIVENESS: THE CASE OF GURAGHE ZONE REVENUE OFFICE

Abstract

Tax audit is an examination to determine whether a taxpayer has correctly reported and assessed their tax obligations. The purpose of this study is to assess factors affecting tax audit effectiveness from category A tax payer’s office of Gurage zone tax office. For this study the researcher used five factor affected tax audit effectiveness variables were examined; competency of tax auditors, independency of tax auditors, top management support, audit quality, and audit attribute. For the sake of achieving the objectives of this study, descriptive and explanatory research designs were employed and the research approach was quantitative approach. Accordingly, the target population for the study was 51 tax auditors ‘and the researcher uses census method to select respondents from tax revenue office. The data was analyzed by using statistical package SPSS version 21 and descriptive and econometrics tool OLS; All independent variables (AQ, TMS, AA, OI and CM) were 49.5% explained the dependent variables (TAE). The study revealed that there existed all independent variable has significant and positive relationships between the Audit Attribute (β =0.282 prob. = 0.018), audit quality (β =0.230prob. = 0.011), organizational independency (β =0.444 prob. = 0.000), competency (β =0.403 prob. = 0.002) and top management support has (β =0.308 prob. = 0.003) with tax audit effectiveness. Based on the finding the study suggested that the office should establish hire and train all staff to compute their work effectively and taxpayers to improve tax compliance and the level of tax audit effectiveness.