Tax Brochure - Caseware International Inc.

Closing the Tax Gap
with CaseWare IDEA ®
The U.S. Internal Revenue Service (IRS) estimates more
than $350 billion goes uncollected in taxes, or into the
underground economy. Known as the “tax gap,” the majority
of these unpaid taxes are caused by individuals and companies
understating or misreporting incomes. Other contributing factors include:
Limited Resources
Federal, state and local governments all face budget and staff reductions, resulting in fewer resources
available to examine a greater percentage of tax returns. Staff attrition also creates gaps in expertise
leading to less effective assessments and the ability to stay in front of emerging threats.
Data Conundrum
When it comes to tax data, variety is the norm. For example, performing a tax assessment for the
restaurant industry involves examination of bank account data from numerous financial institutions,
employer identification numbers (EIN), and/or numerous types of point-of-sale (POS) system data.
Without a solution to bring data in from disparate systems, tax administrators are unable to analyse
the full population of data.
Practical Applications to Improve Tax Assessments & Collections
IDEA® data analysis enables auditors to examine disparate sources of data as if they were
whole, and run simple tasks to view anomalies and potential non-compliant activities.
The
IDEA Process
Import Data
Perform Analysis
Review Results
Any Data Source
• PDFs
• ERPs
• Point-of-Sale
systems
Execute Tasks
Age • Append • Compare/Correlation • Duplicates
Extract • Gap Detection • Group • Join • Sort
Search • Statistics • Stratify • Summarize • Trend Analysis
Run Analytics
• Reconcile general ledger to financial statements and tax returns
• Summarize tax returns to reconcile taxable earnings to payroll annual returns
• Extract sales transactions from unedited point-of-sale transaction files
Results
Reports
Charts
Exports
History
Project Overview

Benefits of Using IDEA ® for Tax Analysis
Get the
Complete Picture
• Import an infinite amount
of records from practically
any source, including
bank account details,
EIN, POS system data,
ERPs, spreadsheets, etc.
• Read-only access to data
helps ensure data integrity
and accurate assessments
Simplified
Analysis
• Tax audit specific
commands that easily
identify duplicates, detect
gaps in numeric sequences,
group data by categories
and filter numerous rows
and columns of data in
seconds.
• Automatically record
every analytic step
to automate repeatable
processes
Collaborative
Analytics
• One platform to gather data
from disparate systems to
allow entire audit team to
access data and analytics
from a centralized source
• Synchronized decisions based
on up-to-date accurate data
• Audit skills and expertise
can now be kept long term in
a central repository.
Zapper Fraud – Emerging Threat to Global Tax Revenues
Clever fraudsters have discovered a way to make electronic sales transactions disappear, thus eliminating taxes owed on
that revenue. An automated sales suppression device, referred to as a Zapper, is a software program designed to falsify
electronic records of point of sale (POS) systems for the purpose of tax evasion. Zappers are commonly used in the
restaurant and retail industries to delete electronic transactions, and have become problematic to tax administrations
worldwide.
The Canadian Restaurant and Food Services Association estimated suppressed sales in restaurant sector could add up
to nearly CAD $2.4 billion. In a South African case the wholesalers had expatriated EUR 22 million out of South Africa.
Zappers modify sales records in the POS to make it appear as though fewer transactions actually took place. It produces
two sets of accounting records; one accurate set is created so the business owner can check for internal theft, and
another adjusted version provided to tax authorities. Easy to conceal and install, Zappers can be accessed through USB
drives, removable CDs or deployed via the Internet.
Using data analysis to un-zap hidden (suppressed) sales
Facing potential revenue loss due to Zapper fraud, the Canada Revenue Agency (CRA) used data analysis techniques to
find hidden sales by examining raw POS system data. The CRA searched for unusual trends, such as low cash sales and
low average cash bills. The agency was able to use a number of unique identifiers such as transaction ID to detect bill
numbers not in sequence and analyse cash vs. non-cash ratios. The agency was able to find unreported sales of about
$70 million; however a significant portion was recoverable.*
*Electronic Sales Suppression: A threat to tax revenues, Organization for Economic Co-operation & Development (OECD) 2013
CaseWare IDEA Inc.
1 800 265 IDEA (4332) ext. 2803
sales@caseware-idea.com
CaseWare Inc. has over 400,000 users worldwide and is an industry leader
in providing data analysis and continuous monitoring technologies for
auditors, accountants and finance professionals. IDEA ® is a user-friendly
tool designed for tax auditors to help extend auditing capabilities and
improve revenue collections. CaseWare’s head office is in Toronto, Canada
and has regional sales centers in the US, Latin America, Netherlands, China
and 40 distributor partners serving 90 countries.
www.caseware.com/products/idea
For more information about how CaseWare IDEA can help you perform
more efficient and effective Tax Analysis, contact us for a free live demonstration.