THE Bureau of Internal Revenue (BIR) has established the BIR Audit Program to consolidate various audit programs into a single, uniform framework to standardize tax investigations across all its offices.
Internal Revenue Commissioner Charlito Martin R. Mendoza issued Revenue Memorandum Order No. 22-2026 to prescribe the BIR Audit Program and institutionalize and integrate existing and updated audit policies and procedures into one coherent framework.
‘These enhanced guidelines institutionalize the BIR’s modernization initiatives and strengthen its risk-based audit and governance framework, while ensuring a fair, efficient, and transparent enforcement of internal revenue laws and the proper assessment and collection of taxes due to the government,’ Mendoza said.
The order will cover all audits conducted by Revenue District Offices, Regional Office Audit Sections, the Large Taxpayer Service Audit Divisions, the National/Regional Investigation Divisions and specialized technical working groups.
All taxpayers, including those subject to mandatory audits, selected via risk analytics, involved in One-Time Transactions, applying for tax clearances, or claiming tax credits/refunds, would be considered potential candidates for audit or verification to determine the correctness of their tax liabilities.
However, the BIR said it would initiate audits only upon issuance of a valid electronic Letter of Authority (eLA), Tax Verification Notice, or Mission Order (MO). Any audit or verification undertaken without such authority shall be deemed unauthorized, the BIR said.
Audit selection is driven by a system-assisted, risk-based process using defined criteria, verifiable data and risk indicators derived from filed tax returns, third-party information and other relevant data available within BIR systems.
To prevent duplication or fragmentation of audit authority, taxpayers would only be subject to one eLA per taxable year, covering all applicable internal revenue tax types.
Audit cases are split into mandatory cases, which are covered by eLAs or TVNs and do not require prior approval from the commissioner, and priority cases, which are electronically selected by risk-based digital criteria and require centralized approval by the commissioner.
All audit activities, findings and case developments shall be properly documented in near real-time in the prescribed BIR systems or platforms to ensure transparency, traceability and effective monitoring.
The memo said all Revenue Officials/Officers shall also observe the highest standards of integrity, objectivity and professionalism, and shall be accountable for the proper, timely and accurate conduct of audit.
All audit investigation reports and assessment issuances may also be subject to a Revalida or ‘audit of auditors’ to reinforce accountability, promote uniformity and uphold quality standards in tax examinations, the memo read.
‘The Revalida shall serve as a quality assurance and compliance review mechanism to ensure that audit findings are factually and legally supported, due process requirements are observed, and assessments are free from material error or procedural defect,’ the order said.
The BIR was previously under fire for the reported misuse of LOAs that has allegedly become a long-running ‘money-making scheme.’
Since then, the agency has cleaned up its office by temporarily suspending all field audits and the issuance of LOAs and MOs.
The BIR said this Audit Program is to reinforce structural reforms, including the Single Instance Audit Framework, system-assisted and risk-based audit selection, anonymized assignment of cases to Group Supervisors and Revenue Officers, mandatory labeling of audit instruments, standardized documentary requirements and strengthened safeguards in the conduct of audit.