Internal reviews
Review activities that can help you to identify areas of potential improvement in FBT administration include:
- regular reviews of relevant general ledger codes or software programs to provide assurance that all fringe benefits have been captured
- preparation of a mid-year return or quarterly or mid-year data integrity reviews, particularly of transactions that have a significant FBT impact, to help ensure that year-end data is accurate and complete. The frequency of data integrity reviews will depend on such things as the size of your government organisation, the number and types of benefits provided, and the maturity of FBT controls and processes
- a pre-lodgment review that examines FBT return data and calculations. Pre-lodgment reviews can be undertaken as a staged approach as information relating to certain benefit types is finalised or completed when the FBT return has been prepared but not yet lodged. Such a review should be undertaken by staff with overall FBT responsibility in your organisation and include the following steps
- compare the current-year return to prior-year returns and investigate any significant discrepancies
- review data provided by external organisations to ensure that it has been accurately processed
- review a sample of transactions to check that they have been correctly reported
- perform a review of calculations to check that any formulas used are correct
- perform an overall 'reasonableness' review of the return, including a high-level review of all working papers
- a post-lodgment review that examines FBT return data, calculations and processes. Post-lodgment reviews should be undertaken after the FBT return has been lodged but while the process is still fresh in the minds of the staff who prepared the return. The review should address two main questions
- What aspects of the process went well?
- What aspects of the process require improvement?
Some organisations find it useful to maintain a central issues log to enable issues identified by such review activities to be appropriately recorded, addressed and communicated. For an issue log to be useful, all substantive issues and errors must be captured. The log itself should be reviewed periodically to ensure corrective action has been taken where necessary.
Independent reviews
Independent reviews conducted by your organisation's internal audit team or an external service provider can provide assurance that:
- ongoing compliance obligations are met
- processes are working as effectively as possible
- senior managers and executives are aware of risks.