Indirect Auditing Methods for Individuals Subject to Income Tax


This paper provides a tax audit guide, gathering all indirect audit methods applied both in Greece and abroad. It also identifies the size of hidden tax base and of the amounts that could be revealed and taxed. The aim of the current study is to present the indirect audit methods, as this is the imperative future of tax audits. Indirect methods are applied mainly to individuals, as according to experience, money that has escaped taxation, always ends up in one or more individuals. There are references in the ways in which this fact can be discovered during a tax audit, how to be determined and how understated income will be converted to taxable matter. Problems, opportunities, legislative framework and the overall impact of indirect audit methods are being analyzed in order to reduce tax evasion, in combination with an empirical research conducted as part of this study. A questionnaire that is consisting of 31 questions was completed by 102 tax-employees of the region of Macedonia and Thrace between May 2017 and September 2017. A factor analysis with the method of principal components and with varimax rotation was applied. The relationship among a number of items by grouping them in factors was investigated. Thus, four factors based on 21 questions of our questionnaire, are used for factor analysis. The Kaiser-Meyer-Olkin measure of sampling adequacy (KMO) value and chi-square value for Bartlett’s test of sphericity were checked whether data are suitable to continue the process of factor analysis. All statistical analysis is conducted with the application of the SPSS version 22 software package.

Keywords: Indirect audit, methods, tax audit, income tax, tax evasion.

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