A company receives a letter from the revenue: “We will audit your records for the last three years. Please have the following documents ready.” The managing director wants to know what the revenue may ask for, whether the company must let the officers in, how long the audit may take, what happens if the officers disagree with the return, and how this differs from an investigation. These are the questions of this topic.
This topic covers the three kinds of inquiry (desk examination, tax audit and tax investigation), the stages of a field audit, the documents requested, the powers of the revenue and the duties and rights of the taxpayer, and how an audit ends. The previous topics covered the powers of the authorities (topic 4), returns and assessments (topic 8) and offences and back duty (topic 11), and this one builds on them.
In 30 seconds
Desk examination: review of data and filings at the revenue’s office, with no visit. Tax audit: a check of returns against books and documents, to verify compliance, normally with notice and within a time frame. Tax investigation: a deeper inquiry where fraud, evasion or wilful default is suspected, with wider powers. Stages: selection, notification, request for documents, field work, findings, exit and reconciliation meetings, assessment, objection.
Duties: keep records (six years under CAMA), give access, answer queries. Rights: notice, representation, confidentiality, objection. 2026: the Nigeria Revenue Service and the Nigeria Tax Administration Act 2025 govern audit.
Key terms in plain English
| Term | What it means |
|---|---|
| Desk examination | A review of filings from the revenue’s own office |
| Tax audit | A check that returns agree with the books and the law |
| Tax investigation | An inquiry into suspected evasion or fraud |
| Back duty | Additional assessment of income left out in earlier years |
| Reconciliation meeting | A meeting to settle audit findings |
| Joint audit | One audit for a taxpayer in several states |
Syllabus check
This topic is in syllabus area B, tax administration. It covers:
- desk examination, tax audit and tax investigation
- the stages of an audit and the taxpayer’s duties and rights
- the position from 2026
CAMA 2020 and tax audit
The Companies and Allied Matters Act 2020 (CAMA 2020) is the company law of Nigeria. The sections below apply to this topic.
| Section | What it says | Link to this topic |
|---|---|---|
| s. 119 and s. 375 | A company must keep proper accounting records, for at least six years | These are the records an auditor asks for; missing records make the revenue estimate the tax |
| s. 377(1) and s. 378 | Directors prepare financial statements that give a true and fair view | The audit starts from the filed financial statements and tests them |
| s. 305 and s. 308 | Directors must act in good faith and with the care, diligence and skill of a prudent director | Directors answer for responding to the revenue and for the accuracy of the returns |
The rules in more depth
Three kinds of inquiry
| Kind | What it is | When used |
|---|---|---|
| Desk examination (desk review) | The revenue reviews filed returns, third-party data and other information from its own office, to find errors, omissions and risks | Routine monitoring; does not stop a later audit or investigation, and its findings feed into them |
| Tax audit | A structured check that returns agree with the books, the supporting documents and the law, done at the taxpayer’s premises (field audit) or by correspondence | Routine and risk-based selection; with notification and a timeline |
| Tax investigation | A deeper inquiry into suspected evasion, fraud or wilful default, which can go back many years and use the full powers of access and seizure | Where there are strong indicators of serious non-compliance |
The FIRS issued guidance notes on audits and investigations to explain the difference and to set out the duties of the revenue team and of the taxpayer and consultant at each stage.
The authority for audit comes from the income tax laws (for example sections 47 and 53 of PITA and 60 and 64 of CITA for the power to assess and to make additional assessments), and the power of access and inquiry is covered in topic 4.
Stages of a field tax audit
- Selection. By risk (large or unusual refunds, mismatches between VAT and income tax, losses year after year), routinely, or because the taxpayer dealt with a party already under audit.
- Notification. A letter states the scope and periods, the taxes covered, the documents required, the date and the contact officers. The FIRS guidance expects a pre-notification meeting to fix the start date and a questionnaire to be completed on time. The revenue has also announced a timeline of 63 days for audits.
- Request for documents. Financial statements, tax computations, general ledger, bank statements, contracts, invoices, payroll, withholding tax credit notes, VAT returns, fixed asset register, board minutes.
- Field work. Officers inspect records, interview staff and test samples. Minutes and interview notes are to be signed off promptly.
- Findings. A summary of findings is given for the taxpayer to review and respond to.
- Exit meeting and reconciliation. The parties discuss the findings and settle the points with evidence; the taxpayer should be represented by a competent person.
- Assessment and closing. Where there is an additional tax, an assessment is issued with interest and penalties, which the taxpayer pays or objects to within the time allowed (see topic 9).
Duties of the taxpayer
- Keep proper books and records. CAMA requires accounting records to be kept for at least six years.
- Give officers access to premises, records and staff, within reasonable hours.
- Answer queries and give documents within the time set.
- Appoint a competent representative, and keep minutes of meetings.
Rights of the taxpayer
- Reasonable notice of the audit and its scope.
- The right to be represented by a tax professional.
- A reasonable time to respond.
- Confidentiality of the information given.
- The right to object and appeal against an assessment.
Powers of the revenue
The revenue may enter premises at reasonable times, require books and documents, make copies, question the taxpayer, staff and third parties, and in an investigation seize documents. The detail of these powers and the penalty for obstruction are in topics 4 and 11. Joint audits are available for a taxpayer that operates in more than one state, through the Joint Tax Board, to avoid several audits of the same matter.
Investigation and back duty
Where the revenue suspects that income has been left out of the returns by fraud, wilful default or neglect, it may investigate and raise additional assessments for earlier years (back duty, see topic 11). The inquiry is not limited by the normal time limit for fraud. Cases may be shared with other agencies, such as the anti-corruption agencies, where crime is suspected.
The taxpayer should co-operate, keep a record of what is requested and supplied, take advice, and consider a voluntary disclosure if tax has been understated.
Technology in audit
The revenue now uses data analytics, VAT and e-invoicing data, bank information and third-party returns to select cases and to compare the figures, and may hold meetings by video (topic 43).
The position from 2026
From 1 January 2026 audits are under the Nigeria Tax Administration Act 2025, carried out by the Nigeria Revenue Service (and the state services for their taxes), with provision for joint audits, a Tax Ombud to hear complaints, and a duty to disclose tax planning arrangements. Penalties have increased: for example ₦100,000 and ₦50,000 for each month a return is not filed, and ₦5 million for contracting with a person not registered for tax.
Use the process above as the general pattern. Under the Nigeria Tax Administration Act 2025 the authority may raise an assessment or additional assessment within six years, and may finish an audit that began inside that period, including raising an additional assessment that arises from it. Where there is fraud, wilful default, neglect or deliberate misstatement, the six-year limit does not protect the taxpayer, and an investigation has no time limit.
Worked examples
Example 1: which inquiry? The revenue notices that a company’s VAT sales are far higher than the revenue in its income tax return and writes asking for an explanation, with no visit.
- This is a desk examination, from the revenue’s own data.
- It may lead to an audit.
Example 2: documents. A company is told that its 2024 and 2025 years will be audited.
- It should assemble the financial statements, tax computations, ledgers, bank statements, contracts, invoices, payroll, WHT credit notes, VAT returns and the fixed asset register.
- It should keep a log of all documents handed over.
Example 3: findings. The auditors say that ₦4 million of expenses are disallowable.
- The company reviews the finding, supplies evidence at the reconciliation meeting, and accepts or contests each item.
- If it still disagrees after assessment, it objects within the time allowed.
Example 4: investigation. The revenue finds a bank account of the company that was left out of the accounts.
- It suspects evasion, so it may open an investigation and assess back duty for earlier years, with interest and penalties.
Example 5: operating in two states. A company is audited by two state services on the same matter.
- It may ask for a joint audit through the Joint Tax Board (the Joint Revenue Board from 2026).
How to score full marks
- Define each kind of inquiry in a line.
- List the stages in order.
- Separate duties from rights.
- Link to objection and back duty.
Common mistakes in the exam
- Treating a desk review as an audit.
- Forgetting the exit and reconciliation stages.
- Confusing an audit with an investigation.
- Omitting the right to representation.
Quick revision
- Desk, audit, investigation.
- Seven stages from selection to assessment.
- Six years of records; the right to object.
Practice questions
Questions 1 to 10 are multiple choice. Questions 11 to 13 are written. Try each before opening the answer.
Question 1. A review of filed data at the revenue’s office is a:
- Field audit
- Desk examination
- Investigation
- Objection
Show the answer
B. Desk examination.
Question 2. An inquiry into suspected fraud is a:
- Desk review
- Routine audit
- Tax investigation
- Refund
Show the answer
C. Investigation.
Question 3. The first stage of a field audit is:
- Assessment
- Selection and notification
- Appeal
- Payment
Show the answer
B. Selection, then notification.
Question 4. CAMA requires accounting records to be kept for at least:
- One year
- Three years
- Six years
- Twenty years
Show the answer
C. Six years.
Question 5. A taxpayer has the right to:
- Refuse access always
- Be represented
- Pay no tax
- Choose the auditor
Show the answer
B. Representation.
Question 6. A taxpayer in several states may seek a:
- Joint audit
- Amnesty
- Refund
- Waiver
Show the answer
A. Through the Joint Tax Board.
Question 7. The meeting that discusses findings is the:
- Exit and reconciliation meeting
- Board meeting
- AGM
- Pre-listing meeting
Show the answer
A. Findings are settled there.
Question 8. Seizure of documents is associated with:
- Desk review
- Investigation
- Filing
- Registration
Show the answer
B. Investigation powers.
Question 9. Which is a duty of the taxpayer?
- Giving access and records
- Setting the tax rate
- Issuing assessments
- Appointing judges
Show the answer
A. Access and records.
Question 10. From 2026 audits are carried out by the:
- FIRS
- Nigeria Revenue Service
- CBN
- SEC
Show the answer
B. NRS.
Question 11 (10 marks). Distinguish between a tax audit and a tax investigation. (6 marks)
Question 12 (10 marks). State the stages of a field tax audit. (7 marks)
Question 13 (10 marks). State the rights and duties of a taxpayer during an audit. (7 marks)
Model answers
Show the model answer to Question 11
An audit is a routine or risk-based check that returns agree with the books and the law, with notice and a timeline; (3) an investigation looks into suspected fraud, evasion or wilful default, is wider, may go back many years and may involve seizure of documents. (3)
Show the model answer to Question 12
Selection; notification; request for documents; field work; findings; exit and reconciliation meetings; assessment or closing. (1 each)
Show the model answer to Question 13
Rights: notice, representation, time to respond, confidentiality, objection. (3) Duties: keep records for six years, give access, answer queries on time, appoint a competent representative. (4)
Pathfinder on Tax audit and investigation: desk review, stages, rights and duties
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
Revise first: Stages of a field tax audit
Source: ICAN Pathfinder, Taxation. Diets covered: May 2026 and November 2025.
Spotted a mistake? Tell us and we will check it.
