Explaining the Origins of Disagreement Regarding the Acceptance of Tax Audit Reports Before the Amendment of Article 272 of the Direct Tax Law Toward Reviving the Outsourcing Framework of Tax Auditing

Abstract

The purpose of this study is to identify and explain the factors causing disagreement between the Iranian Tax Affairs Organization and independent audit firms regarding the acceptance of tax audit reports before the amendment of Article 272 of the Direct Tax Law, aimed at reviving the outsourcing framework of tax auditing. This exploratory–descriptive study adopted a mixed-method approach. In the qualitative phase, semi-structured interviews were conducted with 11 taxation experts from both executive and academic sectors using snowball sampling, and data were analyzed through qualitative content analysis. In the quantitative phase, two rounds of questionnaires were distributed among 157 and 113 experts, respectively. The data were analyzed using binomial, Wilcoxon signed-rank, and Kruskal–Wallis tests. Cronbach’s alpha coefficients of 0.867 and 0.809 confirmed the reliability of the instruments. Findings identified 15 main and 4 additional factors as sources of disagreement. The most critical factors included ambiguity and inconsistency in tax circulars and regulations, complexity and lack of transparency in tax exemptions and deductible expenses, insufficient official supervision of auditing institutions, lack of transparent mechanisms for auditor selection, poor mutual understanding of accounting and tax regulations, low-quality tax audit reports, and weak data-sharing systems between the Tax Affairs Organization and audit firms. Other notable factors included multiplicity of tax lawmaking authorities, absence of a final decision-making body, and mutual distrust between parties regarding professional ethics. The study revealed that a combination of legal, structural, professional, and infrastructural challenges contributed to the disagreements over tax audit report acceptance. Therefore, systematic reforms in supervisory structures, enhanced training and inter-organizational cooperation, improved data exchange infrastructure, and the development of clear procedural guidelines are essential for effectively reviving the outsourcing framework in tax auditing.