Managing mixed responsibilities: a grounded theory of Malaysian tax auditors' dispute resolution behaviour in audit settlement

摘要

Studies on tax auditors’ behaviour are minimal; little is known about tax auditors’ beliefs, strategies and decision-making in performing audits. More studies on tax auditors’ behaviour are crucial because their attitude in performing audits influences the effectiveness of tax administration, particularly in revenue collection and promoting future compliance. This study builds a theory of Malaysian tax auditors’ dispute resolution behaviour in audit settlement. The grounded theory methodology was adopted to analyse tax auditors’ actual audit beliefs, styles and experiences. Based on the theoretical sampling, in total, forty nine in-depth interviews with the Inland Revenue Board of Malaysia’s (IRBM) auditors were conducted. The data analysis shows that the core category of the tax auditors’ behaviour in audit settlement is managing mixed responsibilities. Managing mixed responsibilities means that tax auditors strive to fulfil their responsibilities to their management (i.e. audit outcomes are acceptable by tax law and achieved targets—revenue collection, number of cases and audit points) and to the public (i.e. fair to taxpayers). Achieving responsibilities is important for tax auditors’ career paths and for avoiding litigation, but at the same time, it complicates audit settlement. In managing their responsibilities, the tax auditors interviewed in this study applied different enforcement regulatory styles, including strict enforcement, threatening, explaining and educating and bargaining. A range of interrelated factors influenced their enforcement styles: organisational factors, taxpayers’ characteristics, tax agents’ characteristics, tax auditors’ characteristics and contextual factors. This study not only contributes to literature on tax auditors’ behaviour, but also to literature on tax administration. It suggests that the Inland Revenue Board of Malaysia should issue dispute resolution guidelines to ensure transparency and consistency in settling audit cases. Further, the IRBM should provide consistent ‘meet and deal’ skills to tax auditors and not pressure its auditors to achieve targets, since this affects audit quality and future compliance.