1.1 Background of the Study
Modern societies are technology driven thus changing their characteristics at an accelerating rate. One of the current developments in the information sector that will greatly affect business (improve business and society) is greatly increased computer literacy of leaders and general population which will make computerization transition seamless. That is, the use of computer in any process has been applied in virtually all spheres of human Endeavour. It has equally found wide application in both the private and the public sectors of the economy.
In Nigeria, today there is no gain saying revenue for government, we hear and see computerization project in NITEL, NEPA, and so on; the government has so decided on these project because of their long run advantages over current manual techniques.
In fact, no meaningful society today can exist and function efficiently without an element of computerization in the processing system. It was based on the above point and advantages inherent in computerization that the researcher decides to embark on the study.
In order to improve this revenue so as to provide essential services, the government should be encouraged to computerize its personnel income tax collection medium as well as embark on computerized audit procedures to determine or ensure actual compliance to revenue provision and standards. To achieve this task, in Enugu state, the state board of internal revenue, the sole agent for revenue generation should properly equipped with modern computers and computer literate personnel needed to carry out the doctrines of assessment as well as auditing. The manual auditing procedure and techniques currently being employed in the auditing of personnel income taxes has negative effect on clients (agents) as well as employees, more especially under critical situation such as limited tune frame to computer audit exercise. The manual process can only produce reports after a long period of time that may not be less than two weeks; these delays will mean delayed revenue to the state. Also it could lead to a situation where fatigue could discourage a thorough job by the auditors. We have to note that computer is a system which is not subjects to fatigue as a human being and can perform several jobs the same dexterity as the first job executed.
The manual system of auditing also creates an opportunity for some corrupt tax officials to manipulate and falsify in order to see undue advantage. All this problem with others mentioned above generate the need for the automation of the audit procedure involved in personnel income tax system in Enugu state.
Basically, the computerization components should provide technical assistance in the design, programming, listing and the complementation of a comprehensive computerized auditing system of personnel income tax administration.
This study was conceptualized on the premise that the statutory allocation formula which has remained too meagre to the state – has continued to dawdle in relation terms thereby leaving the state to look inwards for internally generated revenue. That being the case efforts should be made towards changing the present manual system of tax audit so as to maximize the revenue yield available to the government. Lance the issue of misplacement of records, alteration of facts and figure and usher in improved services by tax officials. The implementation of a computerize approach could also lead to efficiency in the use of government resources as well as reducing tax evasion.
Auditing of personnel income system in Udi Local Government Enugu State is done manually at present and stored in audit working. Sheets kept in files. The monitoring unit of the board usually stores it.
Some of the problems observed in the existing system are:
1.3 Aim and Objectives of the Study
The aim of this study is to design and implement a computerized personnel auditing system that will work towards the elimination of ineffective mode of operation in manual based personnel auditing system.
The objectives of this study are as highlighted below;
1.4 Significance of the Study
Since the concept of the world as a global village emerged in the 90’s there has been a rapid development of computer technology in virtually all fields of human Endeavour. An analogy between manual systems and computer systems (Computerized Personnel Auditing System) provides a starting point for management both in private and public sector understanding of computer systems. This development has laid to the advancement of information management and hence necessitated the need to computerize that tax auditing system to meet with the present day needs of the government. This research will equally analyze the present manual system of tax auditing and design a new system to solve the inadequacy inherent accurate and efficient means of tax auditing in Enugu state. The new system to be installed will have all the advantage of the computerize system which includes time, flexibility, interactivity and creating a good database.
1.5 Scope of the Study
The scope of this project is personnel income tax auditing in Udi Local Government Enugu State due to the level of information technology in Nigeria, especially Enugu state. There will be some manual operation to complete the auditing process area such as notification of auditing exercise will still be performed manually. It covers the registration of client and the computation of taxation as well as processing the tax auditing record in order to generate accurate results. Generally, this project is geared towards the design and implementation of a computerized auditing personnel system for Enugu state board of internal revenue. It is expected that this project will be successful enough to draw interest from other organizations, companies, etc.
1.6 Limitations of Study
In the course of carrying out this research work a number of problems were encountered.
1.7 Definition of Terms
Analyst: This is a person or professional who studies the problem encountered by a system and creates means of solving them by introducing a better system.
Audit Working Papers: these are columns sheet of paper on which records of incomes of employees of the audited Companies organizations are made. They are source record documents at the top right corner of the working papers are provisions for the schedule number, name of person who prepared the working paper and the dates of the preparation. At the top left corner of the working paper is made up of serial number column 2 for names of employees, columns 3 for basic salary. Column 4-15 are for the months from January to December while column 16 is allowed two rows and handle uses of maximum of twenty (20) employees per sheet of 40 rows, the second row of the two rows per employee is used to record monthly tax deducted.
Auditing: Audit is a Latin word meaning “He hears” conventionally of records and draft account produced by companies/organizations by tax auditors to enable the auditors form opinions as to the adequacy or inadequacies of the system. It also helps in ascertaining the extent of compliances to lay down rules and regulations. The end result as required by law is for the auditor to put himself in a position where he can express an opinion concerning.
Code: It is a written guideline that helps to determine whether a specific action is ethical or unethical.
Computer: Computer is an electronic device operating the control of instructions stored in its memory that can accept data (input) manipulate the data according to a specified rules (processing) produces result output and stores the result for future use.
Data processing: is defined as the entire process of converting or manipulating data into definite meaningful information (Adigwe, & Okoye, 2015).
Data: It is the facts collected for decision making they are facts that are kept to be processed to get more information.
Database Management System (DBMS): it is software which controls the flow of data and checks and checks on how data are stored.
Database: is an organized /unique collection of related files. It is a collection of schemas, tables, queries, reports, views and other object.
Design: is the art or process of designing how something will look, work.
Documentation: material that provides official information or evidence that serves as record; written specifications and information that describes the product.
Information: is a processed data that can be read and understand.
IT Form 45: this is an acknowledgement slip prepared by the sender of a letter and signed by both the recipient and sender in which the recipient acknowledges the receipt of a letter requesting him to supply facts necessary for tax audit report is to be submitted as well as correspondences established between the board and outside parties.
IT Form F3 (Tax Deduction Card): The IT form f3 is a card prepared and the payer assessment section of the tax office and gives the employers of labor a guide to normal income tax deductions. The taxes deductible is based on the income declaration form. The employees gross earning, gross relief, gross tax due and monthly tax deductions are stated on the card. The tax card is given to the employee who uses it to make deductions of taxes during the year. At the end of the year, these card are batched and returned to the various tax offices in company of form H1 that is the annual return.
IT Form- Income Tax Form: this is a form given to eligible tax payers to complete and return to the tax for their assessment on which the personnel income tax audit is based.
Management Information System (MIS): Information system that generates accurate timely and organized information so that manager and other user can make decision, solve problem supervise activities and track progress.
Monitoring Unit: this is the unit in charge of personnel income tax audit in Enugu state board of internal revenue. It is headed by a principle interceptor of taxes who works in liaison with chairman board of internal revenue through the director direct taxes.
Personnel Income Tax: this represents taxes on the emoluments of employees of companies, organization and establishments. It includes the basic salary and other components such as tent, transport allowance, entertainment and other subject to a stipulated limit that is determined from government legislations.
Security: This helps to prevent unauthorized users from illegally accessing certain data within the database, it protects your data/ files.
Software: These are set of logically related instructions given to the computer to perform some specific task.
System: Is the collection of hardware and software, data information procedure and people.