The study examines the determinants of Tax Audit Effectiveness in an emerging market revenue authority. Specifically, it examines whether organisational, auditor, taxpayer and regulatory factors are related to tax audit effectiveness in a national revenue authority operating in Ghana.
A cross-sectional survey of 183 tax auditors from the Domestic Tax Revenue Division across three administrative zones was analysed using exploratory factor analysis and standard multiple regression analysis.
Results indicate that auditor capability, taxpayer cooperation and regulatory clarity are positively associated with tax audit effectiveness, while organisational factors are not statistically significant. The specification explains 69.3% of the variance, evidencing strong explanatory power.
Findings reflect the perspectives of tax auditors from one authority; future work may consider multiple sources of taxpayer data and compare across institutional settings.
Investments in auditor competence and independence, taxpayer engagement and timely access to records and predictable enforcement/regulatory guidance are likely to yield measurable improvements in audit effectiveness.
This study extends prior work by showing that, within a legally codified and risk-based revenue administration environment, formal organisational structures do not independently predict tax audit effectiveness once auditor capability, taxpayer cooperation and regulatory clarity are jointly considered. By applying a contingency perspective, the study offers actionable insight into which levers matter most for improving audit outcomes in emerging market tax administrations.
1. Introduction
Taxation is a cornerstone of public finance and a primary lever for long-run economic development (Bergeron et al., 2024; Vu, 2025). Strengthening tax systems is therefore central to mobilising adequate domestic revenue, particularly in settings where tax-to-GDP ratios are persistently low and enforcement capacity is stretched (Baer et al., 2025). Within this context, tax audit functions as a critical assurance and deterrence mechanism amid rising business complexity and increasingly sophisticated evasion schemes (Kasper and Alm, 2022; Hebous et al., 2023; Kotsogiannis et al., 2024; Gbadago, 2025).
Recent empirical evidence reinforces this view where random-audit and administrative-data studies show that audits can raise reported liabilities for multiple years post-intervention, with effects varying systematically by audit scope and taxpayers' ex ante intentions to comply (Christiansen, 2024; Kotsogiannis et al., 2024). Comparative and policy analyses similarly highlight that audit modality (face-to-face versus correspondence), audit quality and tax administration capability are decisive for post-audit compliance and revenue yield (Baer et al., 2025; Beer et al., 2025). Micro-level studies further document the roles of auditor expertise, clear audit communication, organisational independence and taxpayer awareness in shaping audit effectiveness (Umar et al., 2019; Chebeso et al., 2024; Tekle, 2024; Taib et al., 2025).
Yet, despite the centrality of effective audits to revenue mobilisation, the literature in developing-economy contexts remains few. Empirical evidence from Africa emphasise persistent administrative and compliance constraints within revenue authorities, including capacity limitations, enforcement challenges and institutional fragmentation (Mascagni, 2018; Moore et al., 2018; Mascagni et al., 2019). Prior national studies advance taxation themes without directly modelling the determinants of audit effectiveness (Abdul–Razak and Adafula, 2013; Acheampong et al., 2016; Bedi, 2016; Bekoe et al., 2016), while others examine audit practice but stop short of estimating what drives audit success (Amponsah et al., 2019; Okpeyo et al., 2019). This gap is consequential, particularly where revenue needs are pressing. Over 2011–2022, the tax-to-GDP ratio trailed the often-cited 20% benchmark for developing economies, peaking at 17.95% in 2015, with attendant budget shortfalls and recourse to debt financing (World Bank, 2021).
Responding to this gap, the present study provides an integrated empirical test of four theoretically grounded driver blocks, namely, management/organisational, auditor-related, taxpayer-related and regulatory-related factors, and evaluates their joint and differential influence on tax audit effectiveness. In doing so, it situates country-level evidence within the emerging causal and systems-level literature (Christiansen, 2024; Kotsogiannis et al., 2024; Baer et al., 2025; Beer et al., 2025), while preserving the contextual insights of earlier national work (Bekoe et al., 2016; Okpeyo et al., 2019; Amponsah et al., 2019).
Despite the growing literature on taxation and tax administration in developing economies, empirical evidence on the determinants of tax audit effectiveness remains fragmented. Existing studies often examine isolated elements of the audit process, such as taxpayer attitudes and compliance behaviour (Abdul–Razak and Adafula, 2013; Acheampong et al., 2016), focus on audit practices without formally modelling effectiveness (Amponsah et al., 2019; Okpeyo et al., 2019) or address broader tax reforms and revenue mobilisation without directly identifying the drivers of audit success (Bekoe et al., 2016). This study contributes to the literature by providing an integrated empirical assessment of tax audit effectiveness that jointly examines organisational, auditor-related, taxpayer-related and regulatory factors within a single explanatory framework, thereby moving beyond prior single-factor or descriptive approaches.
The study also makes a theoretical and contextual contribution by applying contingency theory to explain the conditions under which tax audits become effective in an emerging market setting. Although formal organisational arrangements are often assumed to be central to audit success (Supriyatin et al., 2019), the findings show that these arrangements do not independently predict audit effectiveness once auditor capability, taxpayer cooperation and regulatory clarity are jointly considered. This result supports more recent evidence emphasising the primacy of audit quality, execution capability and institutional fit (Christiansen, 2024; Kotsogiannis et al., 2024; Baer et al., 2025; Beer et al., 2025). Empirically, the study draws on original survey data from tax auditors within a national revenue authority, extending prior work such as Chalu and Mzee (2018) by providing rare internal evidence on audit effectiveness from the perspective of those directly responsible for audit execution. While the analysis builds on the framework proposed by Chalu and Mzee (2018), it is not a mechanical replication; rather, it extends that framework to a legally codified and risk-based tax administration environment in which audit powers, record-keeping obligations and enforcement procedures are formally defined, thereby offering new insight into how institutional context shapes the relative importance of audit effectiveness drivers.
The remainder of the paper is structured as follows. Section 2 presents the theoretical framework and hypotheses. Section 3 explains the research design, data and estimation model. Section 4 provides the empirical results and discussions. Section 5 concludes with policy implications, limitations and directions for future research.
2. Literature review
2.1 Context
Although the present study draws conceptually on the Chalu and Mzee (2018)'s framework, it is situated within an institutional and legal environment shaped by Ghana's contemporary tax administration architecture. Tax audits in Ghana are governed primarily by the Revenue Administration Act, 2016 (Act 915), as amended, which provides a consolidated statutory basis for audit powers, access to taxpayer records, sanctions and enforcement procedures across domestic taxes. The Act also codifies taxpayers' record-keeping obligations, audit time limits and objection and appeal processes, thereby creating a relatively clear and predictable legal framework for audit execution. Substantive tax statutes, including the Income Tax Act, 2015 (Act 896) and the Value Added Tax Act, 2013 (Act 870), further define compliance and documentation requirements that shape audit scope, evidentiary standards and the conduct of multi-tax audits within a single engagement. Prior studies emphasise that such legal clarity and enforceable record-keeping requirements are central to effective tax audits and compliance outcomes (Muhammad, 2013; Chalu and Mzee, 2018; Baer et al., 2025; Vu, 2025).
Within this statutory framework, the Ghana Revenue Authority (GRA) has increasingly formalised risk-based audit selection, standard operating procedures and internal quality assurance mechanisms aimed at improving consistency and accountability in audit practice. Empirical and comparative evidence suggests that audit effectiveness is enhanced when enforcement is guided by clear regulatory rules, structured audit processes and credible follow-up mechanisms (Umar et al., 2019; Christiansen, 2024; Baer et al., 2025; Beer et al., 2025). From a contingency theory perspective, these institutional features condition how organisational structures, auditor capability, taxpayer cooperation and regulatory clarity interact in practice (Drogalas et al., 2015; Vu, 2025). The Ghanaian setting therefore provides a context in which audit effectiveness can be examined under conditions of relatively strong legal codification and procedurally formalised enforcement, allowing the study to generate insight into how these features shape the relative importance of different audit effectiveness drivers.
2.2 Theory and hypothesis development
The contingency theory provides the foundation for this study, as it posits that the success of organisational systems depends on their alignment with both internal and external environmental factors (Drogalas et al., 2015; Vu, 2025). In the context of tax administration, the effectiveness of a tax audit depends on how well structural, managerial and contextual factors fit the operational realities of the tax environment. These contingencies may arise from management and organisational arrangements, regulatory frameworks, tax auditor competence or taxpayer behaviour. Therefore, the theory offers a useful framework for understanding how combinations of factors influence the overall success of tax audits.
2.2.1 Organisational factors
With respect to organisational factors, Devos (2014) emphasises that effective audits require management to assign competent personnel and to plan audit activities carefully. Okello (2014) explains that well-defined organisational policies, efficient allocation and coordination of resources, clear reporting structures, audit manuals and established criteria for performance evaluation are essential for audit effectiveness. Although Ayalew (2014) found that organisational factors may not significantly influence audit success, most empirical evidence suggests a positive association between organisational conditions and audit outcomes. Supriyatin et al. (2019) also observed that appropriate audit types, robust case selection procedures, sufficient audit rates, thorough examination and auditor experience significantly enhance audit performance.
Recent studies provide additional support for this proposition. Christiansen (2024) and Kotsogiannis et al. (2024) show that well-structured audit processes and capable organisations generate sustained improvements in taxpayer compliance. Hebous et al. (2023), Kotsogiannis et al. (2024), Baer et al. (2025) and Beer et al. (2025) highlight that audit quality, operational capacity and institutional design determine post-audit revenue performance. Similarly, Umar et al. (2019), Chebeso et al. (2024), Tekle (2024) and Taib et al. (2025) demonstrate that effective communication systems, independence safeguards and technology-driven information management enhance audit quality. These findings collectively confirm that management and organisational capabilities shape the precision, efficiency and integrity of the audit process, thereby increasing its effectiveness.
Organisational factors positively affect tax audit effectiveness.
2.2.2 Tax auditor factors
Tax auditor factors capture the calibre of the audit function and the capability of the personnel who execute it. Auditor quality reflects domain expertise, continuous training, specialisation, the breadth and depth of procedures performed, rigorous planning and documentation, clear communication of findings and a high level of independence. Prior work shows that education, experience and training improve audit outcomes, which supports the view that capability and procedural discipline raise effectiveness, as reported by Ayalew (2014) and by Supriyatin et al. (2019).
Administrative and quasi-experimental studies show that more intensive and well executed audits produce larger and more persistent increases in reported liabilities. This implies that auditor capability and the quality of audit execution are central to deterrence and post-audit compliance, as shown by Hebous et al. (2023), Christiansen (2024) and Kotsogiannis et al. (2024). Comparative analyses conclude that audit quality systems, modality choice and administrative capacity shape revenue yield, which places auditor competence and practice standards at the core of effectiveness, as summarised by Baer et al. (2025) and Beer et al. (2025).
Micro-level studies add that structured training, independence safeguards and robust communication protocols are associated with better audit performance, as found by Chebeso et al. (2024) and Tekle (2024). Work on information systems shows that technology governance and analytics readiness improve case selection, evidence capture and workflow control, which strengthens the auditor effect on outcomes, as discussed by Taib et al. (2025). A recent multidimensional framework positions auditor capability as a primary channel through which institutional pressures translate into effective audits, as argued by Umar et al. (2019). Together, this body of evidence indicates that auditor expertise, disciplined process execution and institutional independence directly enhance detection, increase voluntary compliance after audit and sustain revenue effects over time.
Tax auditor factors positively affect tax audit effectiveness.
2.2.3 Taxpayer factors
Taxpayer factors describe conditions on the auditee side that allow audits to work as intended. Effective audits rely on cooperative behaviour, timely and complete responses to information requests, unrestricted access to records and orderly documentation. When taxpayers provide accurate information, trust with the authority improves and audit frictions decline, as argued by Al-Frijat (2014). Recent causal evidence shows that post-audit compliance improves when audits are well executed and when taxpayers engage constructively. Christiansen (2024) finds persistent compliance gains among self-employed taxpayers following random audits, with effects shaped by taxpayers' initial intentions to comply. Kotsogiannis et al. (2024) document multi-year increases in reported corporate liabilities and show that audit type matters for subsequent behaviour.
Comparative analyses reinforce the role of cooperative interaction during audits. Beer et al. (2025) report stronger compliance effects from face-to-face audits than from correspondence audits, underscoring the value of substantive, dialogic engagements with auditees. System-level work also links administrative performance and cooperative practices with narrower compliance gaps. Baer et al. (2025) shows that stronger tax administration performance is associated with smaller VAT gaps across countries, with implications for how cooperative documentation and timely disclosure facilitate resolution and follow-up. Chebeso et al. (2024) highlight communication quality and organisational independence on the authority side as determinants of effectiveness, while Tekle (2024) shows that taxpayer awareness and engagement support better audit outcomes. Evidence on information systems suggests that readiness for real-time data sharing improves case selection and evidentiary quality, which raises the payoff to cooperative disclosures by taxpayers, as discussed by Taib et al. (2025) and in the OECD Tax Administration 2024 comparative report. Emerging research on cooperative compliance further notes that transparency and structured engagement by taxpayers support better compliance outcomes, while excessive complexity can blunt these benefits, as shown by Schipp (2024). Taken together, these findings support the view that auditee cooperation, documentation quality and timely access to information directly enhance audit effectiveness by improving detection, speeding issue resolution and sustaining compliance after the audit.
Taxpayer factors positively affect tax audit effectiveness.
2.2.4 Regulatory/legal factors
Regulatory provisions shape the tax environment and the conduct of audits. Chalu and Mzee (2018) argue that the availability and consistent application of regulations, standards, leadership guidance and tax policy instruments provide the structural rules that anchor audit work. Evidence on enforcement style also supports a regulatory channel. Muhammad (2013) identifies five enforcement styles, namely bargaining, explaining and educating, firm enforcement, threatening and avoiding, and shows that each style is associated with higher audit effectiveness when applied with clarity and consistency. Drogalas et al. (2015) report that regulatory factors exert direct effects on audit outcomes, which aligns with the view that regulations calibrate the scope, intensity and follow up of audits.
The OECD Tax Administration 2024 series documents that jurisdictions with clear legal gateways for information access, quality assurance frameworks and codified audit procedures exhibit stronger performance across compliance and dispute resolution indicators, which places regulatory design at the centre of effective audits. Recent international evidence also links administration performance and regulatory quality with narrower compliance gaps (Baer et al., 2025). Baer et al. (2025) show that performance measured with standardized diagnostics such as TADAT and ISORA explains cross country variation in VAT gaps, which implies that stronger legal and procedural underpinnings improve compliance outcomes through audit capability and follow up.
Research that compares audit modalities finds that rules which govern selection, contact and taxpayer rights and obligations influence the compliance effect of audits. Beer et al. (2025) report that face-to-face audits tend to produce larger positive post-audit effects than correspondence audits, a result that underscores how regulatory standards and guidance over audit practice can shape revenue yield. Taken together, the legal framework and supervisory standards define access to information, sequencing of procedures, documentation requirements, remedies and sanctions. These elements determine the credibility of enforcement, the quality of audit execution and the timeliness of issue resolution. The accumulated evidence therefore supports the expectation that stronger regulatory arrangements enhance audit effectiveness.
Regulatory factors positively affect tax audit effectiveness.
3. Methods
3.1 Design and sample
A survey strategy is used to collect primary data for data analysis. The population involves staff of the Tax Audit Unit (TAU) of the Domestic Tax Revenue Department (DTRD) of the GRA. Specifically, the target population is personnel in TAUs of DTRD offices in the Northern Region, Ashanti Region and Greater Accra Region. These represent the country's northern, middle and southern zones to ensure the information obtained is not biased to only one zone. Considering the geographical scope of the study, the researcher employs the online survey questionnaire administration method to collect responses. The questionnaire was adapted from Chalu and Mzee (2018).
Using Krejcie and Morgan's (1970) sample size determination table, a stratified sampling method is used to select 250 out of 317 respondents based on the zone. However, 183 respondents, inclusive of 38% females, fully participated in the survey representing a 73% response rate. The respondents also include 75% of individuals aged 31–50 years, and 95% have either a bachelor's or master's degree qualification. In addition, 82% have professional qualifications – (chartered tax professionals, 43%; chartered accountants, 32% and chartered information systems auditors, 7%) with minimum taxation working experience of six years. The sample also includes key typical respondents, where 83% are principal revenue officers, and 9% are either Chief Revenue Officers or Assistant Commissioners.
3.2 Model and measures
Following Chalu and Mzee (2018), our model is:
The study adapts the measures from Chalu and Mzee (2018) for both the dependent and independent variables, as shown in Table 1.
Descriptive statistics (N = 183)
| SN | Statements | Mean | SD |
|---|---|---|---|
| Management/organizational factors | |||
| I1 | A sufficient budgetary allocation is made for tax audit | 4.125 | 0.817 |
| I2 | Top management gives high attention to the audit report | 3.772 | 0.812 |
| I3 | Top management inspires professional education and assists in the training of tax audit staff | 3.679 | 0.822 |
| I4 | Serious attention is paid by management to the development of tax audit personnel in the audit profession | 3.189 | 0.915 |
| I5 | The organization's structure allows staff to adapt to new changes quickly | 3.792 | 0.788 |
| I6 | The leadership structure of the tax audit unit from top to bottom is transparent and smoothens the flow of instructions | 3.787 | 0.693 |
| I7 | Transparency exists in the distribution of new policies to perform tax audits to tax auditors | 3.892 | 0.828 |
| I8 | Quality and systematic management procedures exist to aid tax audit execution that is adhered to by all staff | 4.234 | 0.943 |
| Tax auditor/audit team factors | |||
| I9 | Tax auditors have the educational and professional competence to carry out audits | 3.843 | 0.658 |
| I10 | The tax audit unit has an apparent division of labour | 3.755 | 0.613 |
| I11 | Adequate audit manuals exist to aid the execution of tax audits professionally | 3.730 | 0.639 |
| I12 | The audit management team is strong and is led by an independent manager | 3.947 | 0.715 |
| I13 | The tax audit unit has complete independence to execute its duties | 4.215 | 0.687 |
| I14 | The audit unit has policies and procedures in place to comply with quality standards | 4.163 | 0.789 |
| I15 | There is a Commissioner/other people with adequate experience and authority to ensure tax audit effectiveness and monitor quality standards compliance | 4.360 | 0.515 |
| I16 | The Tax Audit office has a readily accessible technical library containing manuals, tax laws and regulations or computerized versions | 4.222 | 0.634 |
| Taxpayer factors | |||
| I17 | The taxpayers' attitude to tax audits is good | 3.792 | 0.764 |
| I18 | Taxpayers prepare their reports in line with the requirements of the tax laws | 3.981 | 0.742 |
| I19 | Taxpayers provide quick responses to queries from tax audits | 3.635 | 0.875 |
| I20 | Taxpayers cooperate with tax auditors during tax audit reviews | 3.581 | 0.728 |
| I21 | The tax auditees show high satisfaction with the tax activities of the tax audit | 3.846 | 0.635 |
| I22 | Tax authorities select taxpayers for audit based on three approaches: Scheduled approach, Targeted/Issue based approach and Risk-based approach | 3.978 | 0.789 |
| I23 | Modern-day tax audits are geared toward the risk-based approach to ensure resources are efficiently allocated to achieve optimal results | 3.689 | 0.589 |
| Regulatory factors | |||
| I24 | Tax audits are sanctioned by Section 36 of the Revenue Administration Act, 2016 (Act 915), as amended | 3.973 | 0.639 |
| I25 | Tax audits are intended to: Confirm if taxpayers have paid their fair share of tax; promote voluntary tax compliance among taxpayers; deter non-compliance among taxpayers and others | 3.687 | 0.573 |
| I26 | There is an existing legal requirement to keep records by taxpayers that is indispensable | 3.749 | 0.493 |
| I27 | The tax audit is done by adhering to the provisions of tax law and regulations in Ghana | 4.116 | 0.613 |
| I28 | An audit may be conducted under more than one law (that is, the audit may cover multiple laws–VAT Act, Income Tax Act, Excise Act, Revenue Administration Act and Relevant Regulations at once) | 3.769 | 0.719 |
| Tax audit effectiveness | |||
| I29 | Transparent tax audit procedures exist that reduce the extent of complaints from taxpayers | 4.234 | 0.86 |
| I30 | Tax audits have achieved the following: promoted voluntary tax compliance among taxpayers, deterred non-compliance among taxpayers and others | 3.936 | 1.06 |
| I31 | Tax audit findings are properly documented | 3.745 | 0.94 |
| I32 | The number of tax defaulters has been going down with improved tax audits | 4.379 | 0.99 |
| I33 | The tax audit reports are clear and well-presented | 4.173 | 1.03 |
| I34 | The audit unit has policies and procedures in place to comply with quality standards | 4.236 | 0.715 |
| I35 | There is a Commissioner/person with adequate experience and authority for checking the effectiveness of the quality systems in place and compliance with the quality standards | 4.288 | 0.616 |
4. Results and discussion
4.1 Descriptive statistics
Table 1 shows the descriptive statistics (mean and standard deviation, SD) for the independent and dependent variables. The mean scores for the items range from 3.589 to 4.349 on the 5-point scale, with minimum and maximum scores of one and five, respectively. Thus, the means of all statements exceed the 5-point scale's midpoint (3.5), indicating that respondents agree that management/organizational, tax auditor, tax regulatory and taxpayer-related factors influence tax audit effectiveness.
Regarding the organizational or management factors, the highest mean (4.234) implies that quality and systematic management procedures exist to aid tax audit execution that is adhered to by all staff. Regarding the tax auditor factors, the statement “adequate audit manuals exist to aid the execution of tax audit in a professional manner” recorded the lowest mean (mean = 3.730), and the item that recorded the highest mean is There is Commissioner/other people with adequate experience and authority for ensuring the effectiveness of tax audit as well as monitoring compliance with quality standards (mean = 4.360).
For the taxpayer-related factors, it is seen that the item with the lowest mean is Taxpayers cooperating with tax auditors during tax audit reviews (mean = 3.581, SD = 0.728). The item that recorded the highest mean is that Taxpayers prepare their reports in line with the requirements of the tax laws (mean = 3.981, SD = 0.742]. Generally, the results of the mean values of the items are closer to 4, indicating that most respondents agree with the statements or items, which shows that the items are relevant in representing taxpayer-related factors that influence tax audit effectiveness. Finally, the descriptive statistics for tax regulatory factors and tax audit effectiveness, with the lowest mean of 3.687 and highest mean of 4.379, indicating that most respondents agree with the statements and that the items are relevant in representing tax regulatory factors that influence tax audit effectiveness.
4.2 Factor, reliability and correlation analysis
Table 2 provides the exploratory factor analysis (EFA) and reliability analysis results for the factors influencing tax audit effectiveness. We perform the Kaiser–Meyer–Olkin (KMO) test of sampling adequacy and Bartlett's test of Sphericity to establish the appropriateness of the factors used for the study. The KMO shows a value of 0.741 which is higher than the acceptable minimum of 0.50 (50%). The probability of Bartlett's test of Sphericity is significant (χ2 = 311.312; p-value = 0.000), indicating the suitability of the factor analysis (Takyi et al., 2025).
EFA and reliability analysis results for individual items of factors
| Statements | Factors | Communalities | ||||
|---|---|---|---|---|---|---|
| F1 | F2 | F3 | F4 | |||
| Independent variables items (n = 28) | ||||||
| I1 | A sufficient budgetary allocation is made for tax audit | 0.715 | 0.698 | |||
| I2 | Top management gives high attention to the audit report | 0.663 | 0.754 | |||
| I3 | Top management inspires professional education and assists with the training of tax audit staff | 0.505 | 0.568 | |||
| I4 | Serious attention is paid by management to the development of tax audit personnel in the audit profession | 0.632 | ||||
| I5 | The organization's structure allows staff to adapt to new changes quickly | 0.579 | ||||
| I6 | The leadership structure of the tax audit unit from top to bottom is transparent and smoothens the flow of instructions | 0.725 | 0.789 | |||
| I7 | Transparency exists in the distribution of new policies to perform tax audits to tax auditors | 0.655 | 0.712 | |||
| I8 | Quality and systematic management procedures exist to aid tax audit execution that is adhered to by all staff | 0.601 | 0.698 | |||
| I9 | Tax auditors have the educational and professional competence to carry out audits | 0.771 | 0.816 | |||
| I10 | The tax audit unit has an apparent division of labour | 0.681 | 0.731 | |||
| I11 | Adequate audit manuals exist to aid the execution of tax audits professionally | 0.559 | 0.680 | |||
| I12 | The audit management team is strong and is led by an independent manager | 0.637 | 0.798 | |||
| I13 | The tax audit unit has complete independence to execute its duties | 0.594 | 0.701 | |||
| I14 | The audit unit has policies and procedures in place to comply with quality standards | 0.621 | 0.827 | |||
| I15 | There is a Commissioner/other people with adequate experience and authority to ensure tax audit effectiveness and monitor quality standards compliance | 0.689 | 0.783 | |||
| I16 | The Tax Audit office has a readily accessible technical library containing manuals, tax laws and regulations or computerized versions | 0.669 | 0.787 | |||
| I17 | The taxpayers' attitude to tax audits is good | 0.616 | 0.591 | |||
| I18 | Taxpayers prepare their reports in line with the requirements of the tax laws | 0.682 | 0.694 | |||
| I19 | Taxpayers provide quick responses to queries from tax audits | 0.568 | 0.591 | |||
| I20 | Taxpayers cooperate with tax auditors during tax audit reviews | 0.552 | 0.741 | |||
| I21 | The tax auditees show high satisfaction with the tax activities of the tax audit | 0.676 | 0.746 | |||
| I22 | Tax authorities select taxpayers for audit based on three approaches: Scheduled approach, Targeted/Issue based approach and Risk-based approach | 0.598 | 0.682 | |||
| I23 | Modern-day tax audits are geared toward the risk-based approach to ensure resources are efficiently allocated to achieve optimal results | 0.639 | 0.811 | |||
| I24 | Tax audits are sanctioned by Section 36 of the Revenue Administration Act, 2016 (Act 915), as amended | 0.635 | 0.756 | |||
| I25 | Tax audits are intended to: Confirm if taxpayers have paid their fair share of tax; promote voluntary tax compliance among taxpayers; deter non-compliance among taxpayers and others | 0.789 | 0.731 | |||
| I26 | There is an existing legal requirement to keep records by taxpayers that is indispensable | 0.627 | 0.583 | |||
| I27 | Tax audit has been conducted by adhering to the provisions of tax law and regulations in Ghana | 0.576 | 0.604 | |||
| I28 | An audit may be conducted under more than one law (that is, the audit may cover multiple laws – VAT Act, Income Tax Act, Excise Act, Revenue Administration Act and Relevant Regulations at once) | 0.617 | 0.688 | |||
| Eigenvalue | 6.851 | 2.241 | 1.634 | 1.478 | 12.204 | |
| % of variance | 24.073 | 16.64 | 10.21 | 13.05 | 63.969 | |
| Cronbach's alpha | 0.792 | 0.849 | 0.715 | 0.763 | 0.781 | |
| No. of items | 6 | 8 | 7 | 5 | ||
| KMO = 0.741; χ2 = 311.312; p-value = 0.000 | ||||||
| Dependent variables items (n = 7) | ||||||
| I29 | Transparent tax audit procedures exist that reduce the extent of complaints from taxpayers | 0.804 | ||||
| I30 | Tax audits have achieved the following: promoted voluntary tax compliance among taxpayers; deterred non-compliance among taxpayers | 0.742 | ||||
| I31 | Tax audit findings are properly documented | 0.641 | ||||
| I32 | The number of tax defaulters has been going down with improved tax audits | 0.657 | ||||
| I33 | The tax audit reports are clear and well-presented | 0.780 | ||||
| I34 | The audit unit has policies and procedures to comply with quality standards | 0.763 | ||||
| I35 | There is a Commissioner/other people with adequate experience and authority to check the effectiveness of the quality systems in place and compliance with the quality standards | 0.843 | ||||
| Eigenvalue | 10.179 | |||||
| % of Variance | 54.259 | |||||
| Cronbach Alpha | 0.935 | |||||
Note(s): KMO = 0.572; χ2 = 107.352; p-value = 0.000
F1 is organizational and management factors; F2 is tax auditor factors; F3 is taxpayer/auditee factors; F4 is regulatory factors
The EFA extracted four factors (F1–F4) are responsible for about 64% (63.969) of variance, and the communalities of the 28 items range between 0.583 and 0.827, exceeding the minimum threshold of 0.50 as recommended by Hair et al. (2010). The result indicates a high correlation between the extracted factors and their elements or items, and the EFA extracted a more significant proportion of the variables' variance (Hair et al., 2010). For Cronbach's alpha, the coefficient values range from 0.715 to 0.849, with the overall coefficient for the items being 0.781, which is higher than the minimum acceptable level of 0.60, as Chalu and Mzee (2018) suggested. Similarly, The KMO test of sampling adequacy of 0.572, the significant test of Bartlett's test of Sphericity (χ2 = 107.352; p-value = 0.000), average variance extracted of 54.3% with factor loadings of the items range from 0.641 to 0.843 and the overall Cronbach alpha coefficient value of 0.935 for tax audit effectiveness show that the items are reliable with the higher internal consistency of the extracted factors.
The correlation matrix in Table 3 shows that all the independent factors, namely, management and organizational factors, tax auditor factors, taxpayer factors and tax regulatory factors, significantly correlate with the dependent variable (tax audit effectiveness). There is multicollinearity or high collinearity among the variables when the r-value exceeds 70% (Gyimah et al., 2020; Nkukpornu et al., 2020; Adeola et al., 2021; Gyimah and Adeola, 2021; Bonsu et al., 2022). The highest correlation is between tax auditor factors and tax audit effectiveness (r = 0.643; p-value <0.01), while the lowest correlation is between taxpayer factors and tax audit effectiveness (r = 0.444; p-value <0.01). Thus, collinearity and multicollinearity should not be a problem for the study.
Correlation results
| 1 | 2 | 3 | 4 | 5 | |
|---|---|---|---|---|---|
| 1. Tax Audit Effectiveness | 1.000 | ||||
| 2. Management and Organizational Factors | 0.620*** | 1.000 | |||
| 3. Tax Auditor Factors/Audit Unit Adequacy | 0.643*** | 0.434** | 1.000 | ||
| 4. Taxpayer Factors | 0.444** | 0.280*** | 0.380** | 1.000 | |
| 5. Tax Regulatory Factors | 0.604*** | 0.525** | 0.492*** | 0.373** | 1.000 |
Note(s): Significant levels: ***p-value <0.01, **p-value <0.05, *p-value <0.1
4.3 Regression results
4.3.1 Model indices
The regression analysis reports an R-square value of 0.693, meaning the independent factors are collectively responsible for 69.3% of the variability in the dependent variable (tax audit effectiveness). Also, the F-statistics is significant at the 1% significance level, indicating a statistically significant linear relationship between the set of independent factors and the dependent variable. The results of the model indices (R-square and F-statistics) show that the independent variables represent a more robust set of factors that predict the effectiveness of tax audits. All coefficients and test statistics reported in Table 4 are based on the verified regression output.
Regression results
| Variables | Beta (t-value) | Sig. |
|---|---|---|
| Management and Organizational Factors | −0.705 (−0.90) | 0.369 |
| Tax Auditor Factors/Audit Unit Adequacy | 0.682 (3.37) | 0.000*** |
| Taxpayer Factors | 0.261 (2.158) | 0.032** |
| Tax Regulatory Factors | 0.317 (1.770) | 0.078* |
| Constant | 0.906 (1.739) | 0.081* |
| Model indices | ||
| R Square | 0.693 | |
| Adj. R Square | 0.578 | |
| F-statistics | 140.352*** | |
Note(s): Significant levels: ***p-value <0.01, **p-value <0.05, *p-value <0.1
4.3.2 Model results and discussions
From Table 4, the coefficient of organizational-related factors is negative and insignificant, and thus, H1 is not supported. This aligns with Ayalew (2014) but contrasts with Supriyatin et al. (2019). A contingency interpretation is that formal structures do not translate into effective audits when they are not aligned to task demands in selection, workflow control, information quality and follow up. Comparative evidence indicates that outcomes hinge on enactment quality rather than the mere presence of policies, which is consistent with Beer et al. (2025) and Baer et al. (2025).
However, the coefficient of tax auditor factors is positive and highly significant, and thus H2 is supported. The magnitude indicates economically meaningful gains in effectiveness as auditor capability improves. This is consistent with Ayalew (2014) and Supriyatin et al. (2019) and reinforced by recent work. Christiansen (2024) documents persistent post-audit increases in reported liabilities when audits are executed with rigor. Kotsogiannis et al. (2024) show multi-year increases in corporate liabilities when audit depth and targeting improve. Under a contingency lens, auditor expertise and disciplined procedures provide the closest fit between audit technology and the external compliance environment.
Similarly, the coefficient of taxpayer factors is positive and significant, supporting H3. Although Devos (2014) reports no significant link, the present result is consistent with Chalu and Mzee (2018) and accords with newer evidence that cooperative engagement improves post-audit behaviour. Christiansen (2024) finds that treatment effects depend on taxpayer intentions and engagement. Beer et al. (2025) report stronger compliance effects where interactions are more substantive and dialogic. Chebeso et al. (2024) and Tekle (2024) show that responsiveness and documentation quality on the auditee side support better performance. Contingency theory predicts exactly this cross-boundary fit between authority procedures and taxpayer information systems.
Finally, the regulatory factors' coefficient is positive and weakly significant, and H4 is supported at the 10% level. This contradicts Ayalew (2014) but supports Muhammad (2013), Drogalas et al. (2015) and Chalu and Mzee (2018). Beer et al. (2025) show larger compliance effects for face-to-face audits, a difference that relies on clear rules for selection, contact and taxpayer rights and obligations. Baer et al. (2025) link stronger administrative performance and legal underpinnings to narrower compliance gaps. From a contingency perspective, regulations provide the legal gateways and procedural sequencing that enable fit, yet their payoff depends on complementary auditor capability and taxpayer cooperation, which explains the modest significance.
The coefficient pattern is coherent with contingency theory, and auditor capability shows the strongest and most reliable association with effectiveness, followed by taxpayer cooperation and regulatory support. Formal organisational features alone do not ensure impact when they are not matched to the information, technological and behavioural requirements of the audit task. Where auditors are skilled and independent, taxpayers provide timely and accurate documentation, and the legal framework is predictable and consistently applied, audits deliver sustained gains in detection and post-audit compliance. This integrated reading is consistent with Hebous et al. (2023), Christiansen (2024), Kotsogiannis et al. (2024), Baer et al. (2025) and Beer et al. (2025).
5. Concluding remarks
We investigate the determinants of tax audit effectiveness in an emerging market. A quantitative research approach with an explanatory design and survey strategy is employed to analyse 183 respondents from the Tax Audit Unit of the Domestic Tax Revenue Division of GRA. The evidence shows that tax auditor factors exhibit the strongest association with tax audit effectiveness, taxpayer-related factors are also positive and significant and regulatory-related factors provide an additional, albeit weaker, boost. In contrast, organisational factors do not attain statistical significance once capability, cooperation and legal clarity are entered jointly. These results support a contingency interpretation of tax enforcement in which audit “technology” must fit the auditee's information environment and be anchored in codified gateways. Auditor expertise, sector specialisation, disciplined procedures and analytics reduce detection risk and improve evidentiary quality; cooperative taxpayers lower information asymmetry and verification costs and clear rules reduce procedural uncertainty and moral hazard. Organisational arrangements matter only insofar as they enable these three levers. Thus, capability, cooperation and clarity operate as complements that translate scarce audit hours into durable post-audit compliance and revenue gains.
For policy and managerial practice, three priorities follow. First, build capability where it yields the greatest marginal returns. Establish structured curricula that link direct and indirect tax law to sector-specific playbooks (e.g. construction, FMCG, fintech), interviewing techniques, evidence appraisal, and data analytics skills. Convert training into routine practice through mentored file reviews, calibrated caseloads and engagement quality reviews for material assessments. Protect independence via rotation on sensitive portfolios, conflict-of-interest declarations and dual sign-off above materiality thresholds. Create specialist tracks, for example, VAT refund audits, platform-economy audits and transfer-pricing scoping, to deepen domain knowledge and raise detection quality. Second, engineer cooperation at the audit interface. Publish plain-language information-request templates tied to tax heads (CIT, VAT, WHT), acceptable formats (GL, subledgers, bank statements, inventory rolls, fixed-asset registers) and due-date service levels on both sides. Deploy a secure digital evidence portal with audit trails, time-stamped submissions and version control. Offer pre-audit briefings to clarify rights and obligations and to align expectations on scope and materiality. Pair transparency with proportionate, consistently applied sanctions for non-compliance to deter strategic delay while preserving fairness. Third, codify clarity in the regulatory environment. Translate statute into operational manuals that specify risk-based selection criteria, first-contact rules, documentation checklists by industry, escalation paths and appeal timelines with evidence thresholds. Harmonise overlapping circulars to reduce ambiguity and ensure line-of-sight from legal provisions to field procedures. Regularly communicate rule changes and provide quick-reference guides to auditors and taxpayers to minimise interpretive variance that fuels disputes and cycle-time creep.
Additionally, prioritise segments with high compliance risk and weak internal controls (e.g. rapidly growing firms, cash-intensive trades, complex related-party structures). Use auditable, periodically recalibrated risk models that combine third-party data (banks, customs, e-invoicing, procurement platforms) with behavioural flags (filing gaps, refund volatility, margin anomalies). Track a compact dashboard (days from selection to closure, first-request completeness, sustain rate after review/appeal and two-year post-audit filing and payment behaviour) to steer coaching, refine protocols and justify resource allocation. Complement IT upgrades with improved access controls, secure record-keeping systems, automated deadline reminders, and secure data-sharing mechanisms, alongside small analytics sandboxes where auditors can safely test hypotheses using masked data.
Finally, the non-significance of management/organisational variables should not be read as a call to neglect governance. Rather, it signals that structure is instrumental, not determinative and reorganisations deliver impact only when they unlock human capital, taxpayer interface quality and rule predictability. A pragmatic sequencing is therefore to invest first in capability building and cooperation design, consolidate with regulatory codification and pursue structural changes only where they enable those primary levers. In sum, administrations that align skills, records access and rules are most likely to achieve higher-quality assessments, faster resolution and stronger voluntary compliance, which are foundations for predictable revenue mobilisation and a more trusted tax system.
As with any study, there are some limitations and suggestions for future research. Our sample is tax auditors from three out of 16 zones in GRA, and we recommend that further studies extend data collection to other zones and developing countries. Again, expanding the variables and scope to include other key stakeholders, such as taxpayers and other relevant taxation stakeholders, would help to generalize the outcomes. Finally, we recommend that further studies consider the investigation into comparing the determinants of tax audit effectiveness in large and small firms.
