Head of the Audit Organization Akbar Soheilipour on Sunday expressed alarm at the insignificant number of Iranian companies whose books had been audited after they had filed their tax return with the relevant authorities.
“Barely 27,000 of the 450,000 active companies, or six percent of the total, have been audited and there were no cases of violation,” he told a press briefing at the Ministry of Economic Affairs in a rather unprecedented public assertion of things gone wrong in corporate accounting and audit in the country, Bourse Press reported.
It was not clear why such a large number of companies did not have their balance sheets audited by the country’s top auditing body. Moreover, given the high probability of human error in dealing with data and the intent of cheating the taxman, it is rather surprising that there was no case of violation.
Economic experts and those who keep track of business activities in Iran believe if the small number of the latest audited companies is any measure of what is indeed transpiring in the relatively well-to-do merchant and trade community, the very essence and existence of the audit organization would be irrelevant, not to mention the high cost of maintaining such a huge state bureaucracy.
The senior auditor said “90% of the companies must have their accounts audited by the organization,” but that has not been the case up until now. It was not clear over what period of time the 450,000 firms had sent their tax returns to the ministry to accept or reject the taxes they should pay for their business activities.
His revelations could not come at a more inappropriate time. The Rouhani administration has made clear that it plans to run the country with tax revenues because earnings from oil export have been of the descending for more than a year. Massive tax reforms are in the pipeline that has made sections of the business/manufacturing community apprehensive given the recent decline in almost all industrial and trade sectors.
It is generally claimed that most, if not all, companies cook the books with the apparent aim of tax evasion and concealing big profit margins. This is further indication of the ineffectiveness of tax returns and likelihood of graft.
