Managerial-level control (MLC) 9: Legal and administrative changes
MLC9a: Walkthroughs of process changes to assess whether changes to the law require updates to the internal control framework and development of new controls.
Procedure
Enquire of the entity what are their processes for:
- awareness of tax law changes to income tax, excise and indirect taxes or taxpayer alerts in a timely manner
- assessing if the law change requires any changes in processes or internal controls
- making changes to processes or updating internal controls to address the changes in tax law.
Report their response.
If the above processes exist and are documented, enquire whether:
- law changes have affected the entity in the current financial year
- processes have been updated
- controls have been updated, added or removed.
Report their response.
Better practice report inclusions
- Documented policy for processing legal and administrative changes
MLC9b: Change requests have been submitted to senior management and changes to systems or control mechanisms have been implemented.
Procedure
Refer to MLC-4c for details of reporting mechanisms from the tax team to the IT function.
Following from MLC-9a, enquire of the entity if changes to systems or controls are required to meet with new law requirements, and the review and approval processes required for those changes.
Identify how the entity ensures the implementation of approved changes to systems or control.
Document their response?
Better practice report inclusions
- Documented procedures for changing systems and controls
MLC9c: Policy to deal with law update or implementation difficulties.
Procedure
Enquire if the entity has a policy that states how it will deal with or inform the ATO of any law update implementation difficulties. Page reference the relevant sections of the policy/document.
If no policy exists, enquire of the entity if they have had any implementation difficulties previously and how they addressed those challenges without consulting the ATO. Report their response.
Better practice report inclusions
- Documented policy for processing legal and administrative changes
MLC9d: Correspondence sent to us advising of difficulties.
Procedure
If the entity has previously communicated to the ATO in relation to difficulties associated with complying, administrating or addressing law changes, obtain a copy of their most current correspondence and attach to the report.
Better practice report inclusions
- Correspondence sent to ATO advising of implementation difficulties