Table of Contents

Contents………………………………………………………………………………………Pages
Declaration........................................................................................................................................i
Certification.....................................................................................................................................ii
Approval Sheet...............................................................................................................................iii
Acknowledgements........................................................................................................................iv
Table of Contents.............................................................................................................................v
Lists of tables………………………………………………………………………………...….viii
Lists of Figures………………………………………………………………………………….viii
List of Acronyms............................................................................................................................ix
Abstract............................................................................................................................................x
CHAPTER ONE..............................................................................................................................1
1. INTRODUCTION.......................................................................................................................1
1.1. Background of the Study......................................................................................................1
1.2. Statement of the Problem......................................................................................................3
1.3. Research Questions...............................................................................................................5
1.4. Objectives of the Study.........................................................................................................5
1.4.1. General Objective of the Study......................................................................................5
1.4.2. Specific Objective of the Study.....................................................................................5
1.5. Significance of the Study......................................................................................................5
1.6. Delimitation and Limitation of the Study.............................................................................5
1.6.1. Delimitation of the Study...............................................................................................5
1.6.2. Limitation of the Study..................................................................................................6
1.7. Organization of the Study.....................................................................................................6
CHAPTER TWO.............................................................................................................................7
2. REVIEW OF RELATED LITERATURE...................................................................................7
2.1. Meaning of Taxes and Tax Audits........................................................................................7
2.2. Purposes of Internal Tax Audits...........................................................................................7
2.3. Types of Internal Tax Audits................................................................................................8
2.4. Internal Tax Audit Case Selection Methods.........................................................................9
2.5. Effective Internal Tax Audit Practices...............................................................................10
2.6. Internal Audits and related Literature.................................................................................11
 2.7. Internal Tax Control System...............................................................................................15
2.7.1. Interrelated Components of Internal Control...............................................................15
2.8. Types of Audits Performed by Internal Auditors...............................................................17
2.8.1. Internal Audit Effectiveness........................................................................................18
2.9. Internal Tax Auditing in Ethiopia……………………………………………………...21
2.9.1. Competency Framework for Internal Auditing (CFIA)............................................23
2.10. Approved Internal Audit Manual..................................................................................23
2.11. Empirical Studies..........................................................................................................24
2.12. Summary and Knowledge Gap.....................................................................................25
CHAPTER THREE.......................................................................................................................27
3. RESEARCH DESIGN AND METHODOLOGY.....................................................................27
3.1. Research Designs................................................................................................................27
3.3. Research Approaches..........................................................................................................27
3.4. Population of the study.......................................................................................................27
3.5. Sampling Techniques..........................................................................................................27
3.6. Sample size.........................................................................................................................28
3.7. Source of Data and Collection Instruments........................................................................28
3.7.1. Source of Data.............................................................................................................28
3.7.2. Data Collection Instruments........................................................................................28
3.7.2.1. Questionnaires…………………………………………………………………...28
3.7.2.2. Interview…………………………………………………………………………29

3.8. Procedures of Data Gathering.............................................................................................30

3.9. Data Quality Control...........................................................................................................30
3.9.1. Validity........................................................................................................................30
3.9.2. Reliability....................................................................................................................30
3.10. Data Analysis................................................................................................................30
3.11. Ethical Consideration....................................................................................................30
CHAPTER FOUR.........................................................................................................................32
4. RESULTS AND ANALYSIS....................................................................................................32
4.1. Results of Survey Questionnaire........................................................................................32
4.1.1. Background Information of Respondents....................................................................32
4.2. Purposes of Internal Tax Audit...........................................................................................33
4.3. Internal Tax Audit Case Selection Methods.......................................................................34
 4.4. In-depth interview results...................................................................................................34
4.5. Document analysis results..................................................................................................36
4.6. Discussions.........................................................................................................................36
CHAPTER FIVE...........................................................................................................................40
5. CONCLUSIONS AND RECOMMENDATIONS....................................................................40
5.1. Conclusions.........................................................................................................................40
5.2. Recommendations...............................................................................................................42
References......................................................................................................................................45
Appendices....................................................................................................................................46
Appendix 1 – Internal Tax auditors and investigators survey.......................................................47
Part II: Questions Regarding Effective Internal Tax Audit.......................................................48
Part III: Questions about types of tax audits..........................................................................49
Part V: Questions regarding Internal Tax Audit case selection methods in ARA.........................50
Appendix 2 - Audited taxpayers in-depth interview instrument...............................................50
Appendix 3 - Tax administrators in-depth interview instrument...................................................51