Lifestyle audits: Identifying hidden income

Lorenzo Strauss - Have you ever looked at an individual and wondered how he or she affords the lifestyle in line with their job or business? They might have a similar income to yours, but they are the ones driving a luxury car or dressing in designer clothes or going for expensive holidays. You might have questioned this as something doesn’t add up.At PwC we have realised that looking at the financial records of an entity is not necessarily the only indicator of fraud, but the lifestyles of the executives, managerial employees and even clerks can also be an indicator of fraud.This is where a lifestyle audit or lifestyle analysis might be useful. A lifestyle audit is a comparison of a person declared income with their standard of living in order to identify indicators that the person might be living above and beyond their means. A lifestyle audit mainly involves the investigation of a person’s assets and habits to see if he/she could realistically afford the spending exhibited.Red flagsLifestyle audits aren’t just performed at random and are often targeted based on red flags noted. For example, Inland Revenue might perform an audit on a taxpayer if they feel that there are indications that not all sources of income are being declared owing to the flamboyant lifestyle being exhibited by the individual. There are however explainable instances when this might not be a red flag, for example when the person receives an inheritance or other benefits.In today’s digital world, many of us share our lives on social media. If social media posts reveal a lifestyle that doesn’t match the person’s reported and expected income, this can also be a potential red flag.Fairly complicatedLifestyle audits are regularly carried out globally by various enforcement and regulatory bodies, based on red flags noticed by them. However, in Namibia this can be a fairly complicated process owing to the lack of proper online databases and the rampant use of cash for most transactions. Lifestyle audit steps mainly include: Analysing assets (properties, bank accounts, etc.), one-to-one interviews with relevant individuals and social media site reviews (however specific consent or regulatory intervention might be required).Overall, lifestyle audits can be a powerful tool to combat and detect fraud and assist with the identification of undeclared sources of income. If you are interested in knowing more about this tool and investing training time on this hot topic, you are welcome to contact Lorenzo Strauss at the PwC Business School or visit our website at http://www.pwc.com/na/events for more details.

Lifestyle audits: Identifying hidden income

Kommentaar

Republikein 2025-05-16

Meld asseblief aan om kommentaar te lewer

Lifestyle audits: Identifying hidden income

Kommentaar

Republikein 2025-05-16

Meld asseblief aan om kommentaar te lewer

MELD AAN

Advertensie