As artists think alike…

I’ve been in a warm discussion with my few friends from my previous course in Bachelor of Science in Accountancy. They’ve just stepped fourth year in college which means, they are already slightly exposed to the actual field of accounting. There were two of them picking on me and since I’m already in the Information Technology field, I just can’t completely argue with them especially when we’re already talking about the different anomalies behind taxes.

Taxes or most commonly known as Income Tax is a percentage deduction of one’s earnings per period of time which will later on be forwarded to the National Income. This is primarily a contribution of individuals in the form of money for the sake of the nation’s progress. These taxes are always subject for inspection from authorized internal and external auditors, that as soon as the filing of income tax is questionable, it will thus be given required actions such as penalties from the Bureau of Internal Revenues.

The reality is, these auditors are always the ones in control of our taxes, as proudly stated both by my friends. They have the power to approve the authenticity of the income tax of a certain individual or company. Simply because, as Certified Public Accountants, they are given the authority to claim that each document required for the filing of the income tax proves to be free from fraud and other anomalies. Of course, since they have this official right, they are also capable of presenting fraud as legal.

So how does corruption in accounting really occurs? As I learned from my friends, here’s the most basic explanation: First of all, companies hate the income tax. Suppose they are accumulating earnings presented as Gross Profit with an average amount of Php 100,000,000 per year, the income tax will be taken from this as a percentage. As the current law states, income tax should be 12% of the Gross Profit. This means, Php 12,000,000 will be deducted from the earnings of the company in that certain year. Mind you, Php 12,000,000 is not just a petty cash. Rather than submitting this income for the benefit of the country, they would want it to be used especially for the company’s main interest. Now here comes the auditing process. In order for the income tax to be slightly lessened, they shall be falsifying the different amounts in the financial statements. They are experts, so definitely, they can retain the balances between each account. Now this would somehow cause to present the Gross Profit less than it should actually appear, which also means, less income tax. Well of course, auditors can definitely trace the fraud occurring within these financial statements. To encourage them to prove the authenticity of the financial statements and the income tax, there comes in what we call as "Under the Table" process.

Companies pay auditors to do specific tasks such as allowing fraud to prosper and auditors would willingly accept this money because they are simply amounts which are far greater than the actual salary they earn per year. This is the real salary of the auditors aside from the money they earn from the service they are providing. My friends even tried to tell me, "we earn money far better than any employee there could ever be", and what really pissed me off is when one of them said, "I will definitely work first in the Bureau of Internal Revenues". Why? It’s because he explained to me another reality.

According to my friends, the real job of auditors from the Bureau of Internal Revenues is to wait for the income taxes from different individuals and companies to be filed. As soon as they will notice that one of the income tax documents are fraudulent, they’ll be approaching that individual and interrogate them in a matter related to their profits. The first step they will do is to present these individuals a summary of the probable penalties they will face from the government. By the look of these penalties, nobody would want it to be resolved, because if they do, then they’d completely lose their business. So, in order for them to be saved, they would be forced to settle some amounts to these auditors.

This is reality, but it doesn’t mean we can’t do something about it. The solution to this problem is to simply allow our taxes to be submitted normally as it should be. The reason why corruption occurs is because we tend to break the law for the sake of our personal interests. Auditors just took advantage of our weaknesses and the crime we produce. Still, it proves the saying as what the golden rule states, "Do not do unto others what you want others not to do unto you." We should not allow corruption to be born because someday, we might pay for the price.