The Bureau of Internal Revenue (BIR) is going after independent certified public accountants (CPAs) who help big companies cheat on taxes and threatened to cancel their licenses if they are proven guilty of wrongdoings. BIR Commissioner Kim Henares Wednesday said the agency began issuing “show cause letters” to CPAs it found issuing unqualified opinions in the audit reports of their clients' financial statements in cases where there were validated and verified material misstatements. The move is expected to further improve tax compliance and ensure the payment of the appropriate taxes, Henares said. “This development was brought about by big understatements of declared sales and revenues and consequently, underpayment of taxes, as discovered through the BIR's Third Party Information System,” Henares said. Records of the BIR show that while the Auditors' Report stated that the financial statements present fairly the financial position of the taxpayer, a comparison of the declared income of a taxpayer (per income tax return) and data gathered from third party sources, like purchases from suppliers, showed a different picture. The BIR cited a firm that declared gross sales of P397 million as certified by a CPA, but third party sources revealed purchases amounting to P645 million. “Obviously, in this example, the sales data that should have been declared would have been higher, ,” said Henares. The CPAs were told that had they applied generally required audit procedures, they could have uncovered probable big understatements of sales and consequently, tax liabilities. The CPAs were given 10 days from receipt of the show cause letter to explain in writing their responses to the findings of the BIR. The administration is stepping up its drive against tax cheaters and smugglers to shore up government's cash-strapped coffers and address a budget deficit that is projected to reach P325 billion this year. In July alone, the Bureau of Customs filed cases against eight customs brokers and two “dummy” companies found to have illegally imported products over the last six months, depriving the government of more than P300 million in taxes and duties.
