TAX COMPLIANCE PROCESS INTERNAL CONTROL

QUESTIONNAIRE

Purpose: This sample questionnaire can be used to assess the internal controls related to a company’s tax
compliance process. This document outlines sample tax compliance controls and assists in identifying whether
each control is in place.

Tax Activity Response Primary Contact Comments

Deferred Taxes: Long- and Short-Term
Who determines/calculates the deferred taxes
recorded?
Who is authorized to approve journal entries?
Are recorded balances periodically evaluated to
determine the realization probability and the
valuation allowance?
Are deferred tax liabilities, assets and allowances
based on provisions of the enacted tax law (not
anticipated future changes in tax laws or rates)?
Who has access to deferred tax records?
How do you ensure that journal entries are
complete?
How do you ensure that journal entries are
accurate?
How are deferred taxes determined?
Who reviews the calculations?
Are detailed work papers maintained for each
component (e.g., book-to-tax differences such as
depreciation, etc.) of the deferred tax account
balance?
Who prepares such work papers?
Who reviews and ensures that the detail
reconciles to the (Insert Latest Financial
Reporting Standard) tax calculation?
Who prepares and reviews the deferred and
current federal and state income tax provision
calculations?
Does the company utilize a tax projection model
to assure the realizability of any deferred tax
assets?
How do you assess the adequacy of the valuation
allowance?
Does the company have adequate resources

1 Source: www.knowledgeleader.com
 Tax Activity Response Primary Contact Comments
within the tax department?
Income Taxes
What supporting documentation is gathered to
substantiate calculations/tax returns?
Who is authorized to make payments for the
income taxes due?
Who approves the payment of income taxes due?
How do you ensure that timely filings and
payments are made?
How do you ensure that the current tax rates and
regulations are applied?
What reports are utilized to evaluate results?
What types of analyses are performed?
What resources are used to utilize tax strategies?
Are third parties consulted?
How do you ensure that records are kept safe?
How do you ensure that employees are capable
of performing their roles throughout the tax
process? Are employees continually educated in
tax changes and updates that affect them?
What is the scope of work if tax assistance is
obtained from a third party?
Tax Footnotes
Who prepares the tax footnote?
Who reviews the footnote?
Is an SEC expert in the subject matter involved?
Property Taxes
How are property taxes computed?
How do you ensure that assets exist and are
properly valued to support the tax amount?
How do you ensure that all applicable state and
local taxes are identified and accrued for the
“completeness” assertion?
How is the tax department informed of new
business initiatives that may trigger tax
ramifications (e.g., establishing operations in a
new location)?

2 Source: www.knowledgeleader.com